The International Air Transport Association (IATA) last week announced the successful conclusion of its Vision 2050 meeting in Singapore. In total thirty-five strategic thinkers gathered in Singapore under the inspirational leadership of Singapore’s Minister Mentor Lee Kuan Yew and benefitting from the competitiveness expertise of Harvard University’s Professor Michael Porter.
“Aviation is a unique industry. In 2011 we expect to generate almost $600 billion in revenues with the burden of $205 billion in debt. The industry’s activity is critical. Aviation supports 32 million jobs and facilitates the global village by supporting $3.5 trillion in economic activity. Our commitments to tackle climate change are the most ambitious of any global industry. And we are the safest mode of transport. But our margins are pathetic—just 0.1% over the last 40 years. This is not sustainable. We need to look ahead to anticipate change as we prepare to handle the 16 billion passengers and 400 million tonnes of freight that we will handle in 2050,” said Giovanni Bisignani, IATA’s Director General and CEO.
The full day meeting on Saturday 12 February 2011 included delegates representing governments, airlines, airports, air navigation service providers, manufacturers, leasing companies, general business and academia. They debated four areas that will play key contributing roles in the industry’s sustainable development into an industry that will serve 16 billion passengers and carry 400 million tonnes of cargo in 2050. The four areas were (1) an industry structure for financial sustainability, (2) understanding the passenger of the future, (3) aircraft and technology for the future and (4) infrastructure for the future.
“The timing of the meeting was critical. Over the last decade of crises, the industry lost $50 billion. It also changed completely—improving productivity by 63%, cutting sales and distribution costs by 19% and improving fuel efficiency by 20%. IATA contributed with $55 billion in savings since 2004 through campaigns to Simplify the Business, improve the cost-efficiency of infrastructure providers; and reducing fuel burn with shorter routes and shared industry best practices in fuel management. And still we only earned a 2.7% margin in 2010 which we expect to shrink to 1.5% this year. But we could not miss using this window of profitability, however weak, to look beyond the crisis of the day and answer fundamental questions about what the future should look like and how we can get there,” said Bisignani. “The passenger is at the core of our 2050 thinking. Over the last four decades the real cost of travel has fallen by about 60% and the number of travelers increased ten-fold. We must continue to provide this great value to individual consumers and to society. To do so we need the right technology, efficient and sufficient infrastructure. And we need financial sustainability. Nobody has all the answers or a crystal ball to see the industry in 2050. But there was consensus among all present that there is strategic value in thinking together. And there was general consensus that one of the industry’s biggest challenges is to evolve from the financial disaster of a partial de-regulation that has created fierce competition among airlines but without giving them the normal commercial freedoms to do business. The industry is sick. To protect the value that aviation delivers to consumers, companies, countries and the global economy, we need a common vision to change as we move forward,” said Bisignani.
The Vision 2050 initiative was launched at IATA’s 2010 Annual General Meeting. Over the next months, IATA will consolidate all the Vision 2050 inputs into a document that will be presented at the IATA Annual General Meeting which will take place 5-7 June 2011.