Aviation: Benefits Beyond Borders

Speech by Michael Gill, Executive Director, Air Transport Action Group

2 October 2018, Geneva

Seventy-three years and eleven months ago, 200 people from some 54 countries gathered in the ballroom of the Stevens Hotel in Chicago. On either side of them, across the Atlantic and Pacific Oceans, the Second World War continued to rage on.

But these delegates were in Chicago for a very different purpose. In fact, the exact opposite of conflict. They had assembled at the invitation of the United States to discuss what would happen once war ended. Their mission - to harness the power of civil aviation and prevent fighting from taking place again in one of the first displays of a new spirit of multilateralism.

This was actually six months before the United Nations was formed. But very clear to the delegates of the International Conference on Civil Aviation was the fact that air transport could play a role in helping to rebuild a peaceful world.

Indeed, the invitation to participate in the conference recognised the importance of establishing an international civil aviation system:

“…so that all important trade and population areas of the world may obtain the benefits of air transportation as soon as possible… that the restorative processes of prompt communication may be available to assist in returning great areas to processes of peace.”

Perhaps more than any other sector on earth, air transport has helped bridge the divisions that once existed between nations and between peoples. The development of the multilateral system that includes the United Nations, the World Trade Organization and others is based on a simple premise. Nations that trade with one another are far less likely to fight one another.

Our international institutions are never perfect. But, for the most part, they do work. Despite some regional and national conflicts, for the last 70 years, much of the world has remained largely peaceful. The cold war never turned hot, although perhaps a little warm on occasion…. And Europe has had the longest stretch of peace in its history.

The institution born at that conference in Chicago, the International Civil Aviation Organization, and the written Constitution of our industry that was adopted, the Chicago Convention, have become invaluable to our daily lives and operations.

The Chicago Convention showed what a dedicated group of people could do – and the upside of diligent compromise. A lesson today’s negotiators in other international fora could well take note of.

Because of agreements reached in ICAO and in the associations that make up the heart of ATAG, a pilot today can take off from Geneva and land in say Beijing, flying through the airspace of eight countries with certainty that her or his aircraft can cope with systems everywhere, can communicate across the journey, can pick up fuel along the way, and that he or she will be familiar with the signage and practices anywhere they land.

That’s to say nothing about the standards that go into building an aircraft, including important environmental standards, or the technology we use to navigate, or the laws that govern the skies.

Without these standards, our operation simply would not work.

Think about this.

Every day, an average of 120,000 flights carry some 12 million passengers to their destinations at one of 3,700 commercial airports. Some 1,300 airlines operate 45,000 routes safely guided through the skies by around 170 air navigation service providers. What other industry manages to coordinate a global dance like this, on that scale, day-in, day-out and almost perfectly? It is largely thanks to global standards that it is even imaginable.

We get so involved in the process of connecting people that sometimes we forget just what an extraordinary thing we do every day.

Every two years, ATAG likes to remind the industry to take a step back and look at the bigger picture with the update of our Aviation: Benefits Beyond Borders report and I am delighted to be launching the latest edition of the report here today.

he two key findings of the report are: global air transport supports 65.5 million jobs and $2.7 trillion in global economic activity.

Over 10 million people are directly employed within the sector, at airlines, airports, air traffic management and aerospace manufacturing.

And then we look to the next levels of impact:
• the indirect effect of aviation industry partners purchasing goods and services from other businesses in the economy; and
• the induced impacts of our employees spending money and paying tax.

But we have a far greater impact on the global economy than just the work that we undertake ourselves. So our report also looks to the catalytic effects we generate.

Where, for example, we transport 57% of all international tourists and a third of world trade. Whole businesses exist based simply on rapid global transport.

Taking just the tourism activity supported by aviation, we add a further 36.7 million jobs and nearly $900 billion in GDP to the picture.

And this is conservative analysis – it does not include the other jobs and economic activity that aviation makes possible, and it does not include domestic trade and tourism.

But of course it is not just about jobs and GDP. We also highlight the vital social impacts of the sector.

Access to air services has grown substantially in the last decades and not only in the developed world. Aviation is no longer reserved for the wealthy, but something that more and more can afford.

A ticket today costs passengers on average 70% less than in 1970. Over 88% of the United States population has flown at least once in their life, with half flying once a year. Statistics in the UK show a similar rate.

But look at the significant growth which is happening in other parts of the world – Asia, where regional traffic growth is at more than double the global growth rate.

In some contexts, our role is even more keenly felt.

Small island states and remote communities in places that are impossible to reach by road or sea, rely on air transport links even more than cities with global hub airports.

For goods requiring secure transport, or special conditions such as medicines, the benefits are clear.

And yes - we transport 57% of international tourists, but tourism is not just about our annual holidays. Increasingly, this is becoming a vital part of national and regional economies, replacing dirty primary industries.

But we need to ensure that ‘sustainable’ remains top-of-mind in the future development of the tourism sector. Issues such as overcrowding, social equity and environmental impact all need to be addressed if tourism is to succeed and thrive. That will come about through partnerships and planning between governments, the industry and local citizens.

The pursuit of peace helped create the conditions for free trade agreements and international institutions. But if trading with each other helps to break down barriers, then surely exploring and learning from other cultures will help even more?

If we are going to continue to reap the benefits of connectivity, that connectivity needs to be able to take place in a world where our impact is considered and conquered.

Ten years ago at this Summit, the heads of our industry associations and CEOs of our members gathered for a truly remarkable moment – the first global agreement from any transport sector to limit CO2 emissions. We backed that agreement up with goals and have made significant achievements through collaborative action:

1. The first goal is being met with our current rolling fuel efficiency improvement being 2.1% per annum;
2. The second - to cap net CO2 emissions from 2020 through a global policy framework eight years later became the ICAO CORSIA;
3. And the third goal, to halve CO2 emissions by 2050 continues to be our key area of focus as we will hear over the next days

Our industry has steadfastly stuck to those goals - that commitment to collaborative action over the decade to bring us to where we are today. Much work still remains for us all and we will hear about that throughout the Summit, but it is also worth reflecting what has already taken place in the decade since we set those goals… from investments in new aircraft and the research to make them more efficient than ever… to the pathway towards a new energy future… to collaboration at global and local levels for ever greater efficiency… and looking towards outer-space for improved navigation techniques to make us earthlings travel faster and using less fuel… action at ICAO that has also brought about major standards and the world’s first carbon mechanism for any single sector at a global level, the CORSIA.

A few words on CORSIA – it is coming up fast.

Operators will need to start monitoring fuel use and CO2 emissions from all international flights on 1 January 2019. This is just three months away and, ahead of that milestone, an emissions monitoring plan needs to be developed and signed off by national authorities.

I am generally very encouraged by the readiness of aircraft operators. There has been an outstanding response to training provided by IATA, working closely with ATAG and IBAC, and very positive engagement at a series of workshops held all around the world. This is the first time any global system like this has been attempted and, despite lots of detailed questions arising, I am confident that the industry is on the right track to be ready to meet its obligations.

Governments must also be ready to play their role as authorities and we continue to encourage all States to step up and show climate leadership by volunteering for the first phases of the CORSIA scheme. We are very happy that 73 have already done so.

We also urge progress at the ICAO Council – under President Aliu’s leadership – on two key areas of action: the need to finalise the work on emissions units to be used under CORSIA; and the adoption of the remaining sustainability criteria for alternative fuels. Both are vital parts of the overall picture that need early resolution so airlines and carbon markets can make the necessary preparations.

Sustainable aviation fuels remains one of the key pieces of our climate change challenge and I shall say a bit more on this tomorrow before our final session looking at this important topic. Suffice to say that, in the medium and long term, we will need significant quantities of SAF to enable our future sustainable growth.

But looking to the future, in each edition of Aviation: Benefits Beyond Borders we also chart a view 20 years out, looking at the impact that the growth in traffic and connectivity will have on the number of jobs supported by air transport – and our ability to influence the economy positively.

So, in 2036, we expect that 7.7 billion passengers will help our sector support just under 100 million jobs and $5.7 trillion in global economic impact. This is based on a conservative view of growth, but one that is reflective of a continuation of current trends. But we also asked Oxford Economics to look at a scenario where the world we have come to know is somewhat different, a world subject to fragmentation.

Shifts in global trade policy, a tightening of restrictions on immigration, restraining policies on routes and the break-up of regional alliances… in other words, a retreat from the 70 years of internationalism that we have enjoyed since the second world war. A scenario, sadly, which is currently being played out on the front pages of newspapers around the world.

Passenger growth rates in this world are halved and the ability of our industry to generate and support jobs is also impacted, with 12 million fewer jobs and $1.2 trillion per annum less economic activity. And that is just for aviation – it doesn’t include all the damage done to businesses that rely on our services for transporting goods and people… or other modes of transport… or other businesses in the economy… or the people whose lives are impacted by reduction in connectivity…or the very narrowing of our mental and physical horizons.

Fundamentally, these shifts towards more isolationist tendencies take us back to a time when people were more fearful of those in other countries; where travel and exchange between cultures was not as available to people across society as it is today; and when economic success was limited to certain countries and regions. It is hard to contest that the creation of free trade agreements, open skies agreements, of open visa arrangements, of cross-border jobs and lives has led to an increase in prosperity everywhere.

As we have learnt in aviation, to thrive you need to bring everyone along with you. In the field of safety, we have never questioned working together to make the entire system safe. Likewise, we should not question our spirit of collaboration on sustainable development – so for example, one airline’s CO2 efficiency success is no good if others can’t learn from it and share in the same efforts. That is why we bring the industry together at ATAG, so that ALL parts of the sector can find ways to work together on our future.

It’s worth noting that the Conference in Chicago that created ICAO lasted 37 days non-stop. You’re relieved I’m sure that our Summit will only last for two, but I also can’t help but wonder what some of the men – and they were all men, back then – at that conference might think of the subjects on our programme here today and tomorrow. Gender equality in technical roles and throughout the business, climate change, electric propulsion, helping to tackle trafficking, making fuel out of waste… millennials…!

All subjects probably not on the radar of the distinguished delegates in Chicago.

But it is a testament to their work and foresight that the Convention they produced has stood the test of time and is robust enough to cope with everything the 21st Century can throw at it.

The Chicago Convention is not a historical document, pored over by stuffy aviation lawyers. It is a living, breathing framework that impacts everything that we do. So, we need to celebrate the spirit that drove the delegates in Chicago, the extraordinary system that developed from it… and the unity and progress that can be achieved if we all work together… ‘flying in formation’ if you like… to ensure that our ability to connect the world can continue for the decades to come.

That is the spirit of ATAG and, indeed the spirit of this Summit.

Thank you for your attention.