Ladies, gentlemen, Secretary General, ICAO council members and representatives of ICAO states, directors general, industry and environmental group colleagues. Welcome to the Air Transport Action Group’s 2016 Global Sustainable Aviation Forum.
We have a packed day of discussions here in Montreal and wish to explore interlinked matters of global interest:
- sustainable development; and
- climate change.
Representatives of the world’s governments concluded two key international agreements last year in these areas.
- The Sustainable Development Goals help set the global development agenda for the next 15 years.
- And the Paris Agreement helps to chart a course of action for delivering on much needed climate action.
Both are significant multilateral policy frameworks.
And both will help to make our planet more liveable for more citizens, well into our common future.
We are well into our own momentous year in 2016.
Already, aviation has taken on the challenge of climate change and delivered a responsible, balanced and ambitious package of action and policy objectives that places our sector in a leading position on dealing with our climate change impact.
But climate change cannot be seen in isolation. It must be considered in the broader sustainable development context.
And I think that this is where our plan for climate action really bears fruit: it manages to balance the need to respond to global environmental objectives with the responsibility we have to nations all over the world to support their development: economically… socially… culturally… with trade and tourism… sustainably.
The next generation
It is this well-rounded view of the world that interests one particular group of people.
It may not surprise you to hear that I am not amongst the generation referred to as millennials… (only slightly, you realise…) but at least half my team at ATAG are and a few in this room can claim to be.
If you are wondering whether you are one, check your thumbs for signs of repetitive strain injury from too much texting and tweeting… or you could just check your passport because if you were born between 1980 and around the year 2000, you are considered a millennial.
Why the focus on millennials? Well, they are our next generation of customers, employees, pilots and engineers.
Over 20% of international tourists fall into this group [i]. 75% of millennials say they want to travel abroad as much as possible [ii] and it is now the fastest-growing age-range for travel spend [iii].
They are already a big part of our workforce and their priorities should be our priorities - the priorities for any business or industrial sector that wishes to be successful and responsible in the decades to come.
It is probably fair to say that in many parts of the world, millennials are more united and homogenous than any other generation in history. Most millennials have access to the internet, Netflix, they watch the same TV shows anywhere on earth and have access to the same music and funny cat videos on YouTube.
But it is vital to note that they also retain some of the key cultural and aspirational differences that other generations have had, based on geography and social status.
Making the most of flight
It is a generation that has grown up with a democratised air transport sector… they have not known regulated airfares in the US or Europe… they have been able to fly for as long as they remember… and this is a generation where those experiences are more global than many assume.
Whilst Africa has not yet been liberalised to the extent of other regions, Latin America is catching up quickly, and the millennial generation in Asia has benefited from a rapidly growing aviation sector, where weekend breaks and low airfares have shaken the traditional industry. This has also allowed access to business and leisure journeys for more segments of the population.
A survey[iv] of nearly 32,000 millennials around the world found that 88% of them travelled internationally between 1 and 3 times per year, with 6% travelling more than four times. And 60% of the generation prefers to organise their own travel, rather than relying on all-inclusive tours – with the others liking an itinerary that allows individual adventures. Over 70% of them book their own travel and accommodation, with just a fifth relying on travel agents. They will mainly get travel recommendations from friends and family.
And if you think this is a developed world phenomenon, it is not.
Over 60% of Chinese overseas travellers are already of the millennial generation… and that figure is growing [v].
One piece of good news for our business is that millennials are also more eager to travel in the premium cabin –it is expected that they will make up 45% of the business class market by 2035! [vi]
Access to mobility is one of the key drivers that will help balance the development of our planet. As cultures learn from each other and people meet and get to know their neighbours, the foundations of growth through trade, tourism, connectivity and business can be fostered.
Sustainable development, worldwide
The 2030 Development Agenda was settled at last year’s United Nations General Assembly.
It is a recipe for a better future and consists of 17 goals encompassing all facets of human development – from eradication of poverty, to health, to education, gender equality and of course climate action.
These 17 goals are underpinned by 169 indicators which form a broad picture of how the world can work together to deal with these challenges.
Sometimes it is hard to see how these lofty global goals can make a real impact on people’s lives – or how we as individuals can help to achieve them.
For the last 20 years, ATAG has worked with our colleagues at Oxford Economics and across the industry to publish analysis of the role aviation plays in the world.
This year, we try to identify the ways that our industry can help support some of the key action items on the sustainable development agenda.
ATAG is pleased to be able to share with you today the global summary of our latest Aviation: Benefits Beyond Borders report.
Copies of the summary are available here and the full report will be available in a few weeks’ time.
It goes into great detail and builds on the headlines I shall present this morning.
An impressive industry [[vii]]
First of all, there are the numbers. Whichever way you look at it, we run an impressive operation.
Over 1,400 airlines operate more than 100,000 flights carrying nearly ten million passengers every day.
Almost 4,000 commercial airports are linked by over 50,000 routes between 16,000 unique city pairs.
Flights are guided through the skies by 173 air navigation service providers and over 26,000 commercial aircraft are currently in service.
Last year, we served three and a half billion passengers.
Headline global benefits
When it comes to the role we play in the world, we view this in two ways:
- the direct impact of aviation through the people we employ and the economic activity we generate; and
- the indirect benefits of air transport beyond the industry.
In 2014, 9.9 million colleagues across the industry were employed by airports, airlines, air navigation service providers, manufacturers and businesses operating on airport sites. This activity generated some $664 billion in gross value added to the global economy: it would place aviation as the 21st largest economy in the world.
Those jobs in aviation, by the way, are around 3.8 times more productive than the average job in the global economy.
A wider picture
Then we need to look at the next level of impact – the indirect effect of industry partners purchasing goods and services from other businesses in the economy… fuel suppliers… call centres… construction companies.
The supply chain to our sector adds a further 11.2 million jobs and another $761 billion in economic activity.
When our colleagues finish being productive in the office, on the final assembly line or at the airport and head out to purchase a car, use Amazon.com or even just buy a pint of milk, that activity generates induced impacts and a further 5.2 million jobs and $355 billion in GDP.
But of course, as a sector we have a far greater impact on the global economy than just the work that we undertake ourselves.
For example, we transport over half of all international tourists and a third of world trade.
Whole businesses exist based simply on rapid global transport. It is often hard to get a good picture of the exact impact of these catalytic effects.
But our colleagues at the World Travel & Tourism Council work with the UN WTO and Oxford Economics to publish a detailed deep-dive into the role tourism plays in the world.
Taking just that activity supported by aviation, we can add a further 36.5 million jobs and nearly $900 billion in GDP.
This conservative analysis does not include the other jobs and economic activity that aviation makes possible. It doesn’t include domestic trade and tourism.
But it still shows that air transport supports nearly 63 million jobs and $2.7 trillion in worldwide economic activity.
That is around 3.5% of the global economy.
In decades to come
Looking to the future, our report forecasts that the sector’s growth will continue, with an expected 7 billion passengers taking to the skies in 20 years’ time.
That growth will mainly be seen in Asia-Pacific, Latin America, Africa and the Middle East. In fact, developing economies will see almost double the rate of growth than is expected in North America. Traffic to Small Island States, too is expected to grow rapidly.
With growth in traffic comes a growth in employment and we expect that, by 2034, aviation will support:
- nearly 100 million global jobs; and
- six trillion dollars in economic activity.
Beyond the numbers
But, numbers only tell part of the story.
Our real impact comes from those who benefit from aviation without even really thinking about it.
It comes from the friends and family that can remain connected despite working in different countries.
It helps people in remote communities to gain higher education and have access to healthcare.
Aviation allows millions to start working on ways to be lifted out of poverty through transporting perishable goods to market…
… and allowing other industries to maximise their production schedules.
We transport vital pharmaceutical supplies and work to do our part in tackling epidemics…
… and when disaster hits, aviation’s rapid deployment is unparalleled.
It is through these elements that we work to help support growth in economies and across social barriers.
But to truly appeal to the new customers and executives that the millennial generation will represent, it is no longer acceptable for businesses to simply focus on profits, growth and finance.
A more holistic view of sustainability and environmental concerns is required.
Satisfying our millennials, satisfying the planet
A 2008 study looked at the question of work and sustainability values of this generation which will be taking over the workforce in the coming years [viii].
88% of the millennials wanted to work for a company that shared the same social responsibility values as them and most of them would actively consider leaving a company which had a bad reputation.
Whilst the same survey in 2011 produced slight different results… with naturally more concern for stability and wealth following the economic downturn…
It also found that half would avoid certain sectors of the economy completely, because of a bad social reputation. These included Oil and Gas, Defense, Insurance, Government and the chemical sector.
7% of the millennials would not want to work in transport.
But this generation also tends to value leadership. They demand leaders that are authentic and leaders that display integrity.
They care more about actions than words and they will observe closely the performance of businesses and industries to check that our behaviour is consistent with our public statements.
On the other hand, it’s a generation that are also willing to commit time and energy to organisations and to values set by leaders they believe in.
So we all have a duty to set the scene for this generation of passengers, flight crews, air traffic controllers, operations staff, engineers and soon to be executives.
One of their key areas of interest – almost universally – is the important role of sustainable development.
Survey after survey shows that the millennial generation believes climate change to be a serious problem and supports a transition to clean energy [ix], with higher concerns being shown in Latin America and Asia than even in Europe [x].
It is not just in their choice of company to purchase goods from, or to work for either.
67% of millennials in one survey said their investment decisions are a way to ‘express their social, political and environmental values’ [xi].
And 73% believe it is possible to achieve market rates of return on companies based on their ‘social or environmental impact’.
So it is not only our passengers and colleagues, but our shareholders that will focus our attention on sustainable development… and in fact, they are already doing so.
Setting the agenda
I am very glad to say that, on climate change at least, we are a sector that has shown leadership, vision … and action.
In 2009, aviation was the first industry to set itself global climate goals: a short-term efficiency goal, a mid-term goal to cap net CO2 emissions through carbon-neutral growth and a long-term goal to halve aviation CO2 emissions.
These goals were set as part of the industry’s efforts to respond to the global challenge of climate change, understanding that the efficient operation of the international aviation system is so reliant on globally-agreed standards and systems.
In the seven years since we set those goals, there have been significant achievements across the sector in collaborative climate action:
- Seven new, more efficient, aircraft types have entered service, with another three due to enter the fleet before 2020.
- Airlines have spent over $1 trillion buying these more fuel-efficient aircraft and over 8,000 have entered the world’s fleet.
- Over 100 airports have installed solar power generation on site and 156 are now part of the Airport Carbon Accreditation programme.
- Improvements in air traffic management are helping to reduce emissions through measures such as performance-based navigation, air traffic flow management, shortening of routes and more flexible routings
- We have tested, certified and flown over 2,200 commercial flights on sustainable alternative fuels. There are now five certified pathways for the production of renewable alternative jet fuel. Lower-carbon fuels are now being used on regular flights from at least two international airports with more airports and routes to come.
- In February this year, working through ICAO, governments agreed on the world’s first CO2 efficiency Standard for aircraft, supported by industry and environmental experts.
Last September, industry leaders gathered at another ATAG event where they released an open letter [xii] to governments, urging progress on collaborative action, including the market-based measure.
Of course, the one pillar of our climate action plan that has yet to be realised is the area of economic regulation.
Tomorrow begins the ICAO High Level Meeting on a Global Market-Based Measure Scheme. It is the first time any climate change agreement on developing an economic instrument on a global level has been attempted. We are world-leading in that sense.
As with any multilateral negotiation, the discussions are not easy. You will hear later today more on the exact details of the ICAO-driven plan and some thoughts from industry leaders.
Before then, let’s explore the work that has already taken place across the world of aviation climate action.
ATAG has developed a guide to the amazing work that has already taken place. Aviation Climate Solutions [xiii] showcases 101 examples of climate projects underway in the industry. It represents millions of hours of collaborative action and innovation and should be seen as a guide for what we can all aspire to do… so many of our colleagues already are. Copies are available outside.
This morning we will also discuss some of the ways in which a global offsetting scheme will help beyond simply the climate change objectives we have set.
And later this afternoon we look further down the road towards the technology developments, and sustainable alternative fuels that we need to dramatically reduce our sector’s carbon emissions.
[i] UN World Tourism Organisation (UNWTO), cited in Bank of America Merrill Lynch report Generation Next – Millennials Primer, May 2015
[ii] BCG, cited in Bank of America Merrill Lynch report Generation Next – Millennials Primer, May 2015
[iii] American Express Business Insights, cited in Bank of America Merrill Lynch report Generation Next – Millennials Primer, May 2015
[iv] TopDeck Travel Survey: https://topdecktravel.typeform.com/report/YTLINV/w8Hk
[v]2013 Annual China Outbound Tourism Development Report, cited in Bank of America Merrill Lynch report Generation Next – Millennials Primer, May 2015
[viii] PwC Millennials at work, reshaping the workforce
[ix] Vox article, citing several surveys “Millennials love clean energy, fear climate change, and don’t vote. This campaign wants to change that.”, April 30, 2016: www.vox.com/2016/4/30/11535004/millennials-climate-votes
[x] Telefonica study of millennial attitudes worldwide, cited in Bank of America Merrill Lynch report Generation Next – Millennials Primer, May 2015
[xi] US Trust study, cited in Bank of America Merrill Lynch report Generation Next – Millennials Primer, May 2015