Tough issues await Tony Tyler as Iata chief

PUBLISHED : Monday, 06 June, 2011, 12:00am
UPDATED : Monday, 06 June, 2011, 12:00am


As Tony Tyler, the former chief executive of Cathay Pacific Airways, prepares to take over as head of the International Air Transport Association, he finds the global airline industry again in turmoil.

First-quarter losses of about US$2.2 billion have already been reported by international carriers, while higher jet fuel prices and lower aircraft utilisation will be a drag on profitability for the rest of the year.

Political unrest in the Middle East, natural disasters and a further volcanic eruption in Iceland are among the other challenges faced by the airline industry in the first part of this year.

As Giovanni Bisignani, the current Iata chief, said last week: 'After a record-breaking profit in 2010, 2011 opened with a series of crises and shocks - unprecedented even for aviation.'

And despite last year's sparkling results when airlines made total net profits of about US$15.1 billion, this year promises to replicate the period between 2000 and 2009, when airlines lost US$49.1 billion.

But there are wider issues that Tyler, as head of an organisation that represents airlines operating 93 per cent of the global scheduled air traffic, will have to grabble with as soon as he assumes the Iata leadership.

These include aviation security and the ever-present threat of terrorism; environmental and regulatory pressures that affect both airlines and airports; and finding a way for airlines to make sustainable profits.

All are expected to be on the agenda at Iata's two-day annual general meeting, which opens in Singapore today. Some of the 600 airline industry chiefs expected to attend held preliminary meetings at the weekend.

Tyler, already the chief executive and director general designate, is expected to be elected as Bisignani's successor tomorrow at the end of the annual meeting.

It is likely to be the tougher environmental regime in Europe that will be the first issue facing Tyler after the European Commission yesterday reiterated plans to introduce an emissions trading scheme from January next year.

The scheme, under which airlines will have to buy credits for each tonne of carbon dioxide emitted over a certain level, is expected to badly affect Asian carriers flying long-haul routes to Europe.

The Civil Aviation Administration of China has already asked for amendments to the scheme, saying it will cost mainland carriers 800 million yuan (HK$960 million) in the first year and more than 2.4 billion yuan by 2020.

While the EC said China could apply for an exemption if it could demonstrate it was taking concrete steps to reduce emissions, European officials were adamant airlines must take part in the initiative.

Connie Hedegaard, the EU commissioner for climate action, was particularly forceful that both the international aviation and shipping industries should be included in the emissions trading scheme which will apply to all industries when it is introduced.

Hedegaard said last month she saw no justification for excluding either industry from the trading scheme, which is facing a legal challenge by airlines in the United States.

Some of the other issues facing Tyler and Iata have been mapped out by Bisignani, who in the 10 years at its helm is credited with overhauling the group from a club of large airlines into a global organisation that is truly representative of the airline industry.

The issues include the Vision 2050 initiative, which sets out a blueprint for airline development over the next 40 years and the security checkpoint of the future, where passengers can walk through without stopping, stripping or unpacking.

Both Vision 2050 and future checkpoint, which according to Bisignani 'will take a risk-based approach using passenger information more effectively and the best of technology', will be presented in the next two days.