Iata proposes radical survival agenda

The air cargo industry faces great challenges in 2008. Firstly, record fuel prices are driving up operational costs. The 2008 fuel bill will be US$186 billion, US$50 billion more than last year and four times the total paid in 2003. That also decreases competitiveness against other modes of transport that are less dependent on kerosene. Second, the credit crunch and the resulting economic slowdown are putting a drag on demand, which has led to a sharp decline in freight traffic growth. Third, imbalances in global trade mean that outbound flights from areas such as Asia are often full, but the return legs can be less than half-full. For airlines, this means that revenues are concentrated on one leg, but costs occur across the whole return journey. Fourth, our sea competitors are gaining market share with faster ships, lower prices and innovative solutions. And new capacity coming into the market – 200 to 300 wide bodies entering the market each year to 2011 – will put even greater pressure on yields. So air cargo has to compete, but, how to do so? The answer is a single radical agenda to drive simplicity and efficiency for the air cargo supply chain while enhancing safety, security and environmental performance. Safety is our top priority. We are the safest mode of transportation with one accident for every 1.3 million flights. In 2007 there were 16 cargo accidents – 16% of the industry total. This is down from the 25% recorded in 2006 but it is still not good enough. Surprisingly, most accidents occurred in some of our safest regions. North America reported five accidents, Asia Pacific four, Latin America three and one each in Russia/ CIS and Europe. Africa and the Middle East had perfect records. This points to the need for constant vigilance – everywhere. The Iata Operational Safety Audit (IOSA) is part of the solution and a condition for Iata membership. And we will promote our Integrated Airline Management System which pairs safety and quality management to improve safety performance. Security Security, on the other hand, is still a mess. We have the fundamentals right. Our risk management capabilities are excellent but we have not convinced our stakeholders. Politicians still want to treat air freight like baggage. It is not. The problems are wellknown: • Screening technology is not being optimised. • Few of the 190 ICAO member states are living up to their obligations to implement cargo programmes. • There is little alignment or mutual recognition of standards. Definitions, requirements and enforcement vary from country to country. Iata is leading the industry with our new “Secure Freight” programme. Our approach has three components. The first is to speak with one voice. The Air Cargo Security Industry Forum was born at last year’s symposium. It brings together Iata and Fiata and 25 other industry associations so that we can influence regulators with a common message. Second, we will develop internationally recognised security accreditation standards with a security audit. Third we must create a global registry of secure supply chain operators, including “known shipper” details, to be used by regulators and the supply chain to verify customers’ security accreditation.