Alexandre de Juniac, Director General and CEO International Air Transport Association (IATA), was addressing the opening session of the 74th IATA Annual General Meeting and World Air Transport Summit, Sydney today. In his annual report, the CEO raised concerns over the creeping re-regulation that disregard established aviation standards. His inauguration speech covered a wide range of current affairs from protectionism to trade-wars. He also stressed on the looming capacity crisis that may plague the aviation industry. A few highlights from his inaugural address include:
International Flights and INDIA’s GST
The head of the IATA had strong words for the GST levied on International tickets specifically the business class. He made reference to India’s role in setting up the International Civil Aviation Organisation (ICAO) as well as framing of the resolution that prohibits taxing of International flight tickets. However, de Juniac believes that India’s decision to levy GST was in sharp contrast to International Civil Aviation Organisation (ICAO) objective to foster safe, secure, accessible and sustainable connectivity. GST is levied on airline products and services like tickets, ancillary, change, refund etc. This hinders the IATA’s core mission of facilitating affordable worldwide connectivity. The reason for such strong criticism can be attributed to two major points:
- GST on Air Tickets despite the UN’s pre-resolution that demands States to maintain global standards.
- Airline Industry is plagued by minimum profitability. Tax on air services further impacts trade and economy. Reportedly, Airlines helped deliver 60 million tonnes of cargo last year. This accounts for the one-third of Total global trade.
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The cutthroat competition among Airline operators coupled with minimum profits makes Aviation Industry calls for adherence to the conditions and standards agreed upon by the member states of the International Air Transport Association (IATA). In the words of Mr Alexandre de Juniac, “But there are challenges. Smarter regulation needs to counter the trend of creeping re-regulation. Global standards must be maintained by the states that agreed (upon) them. And we need to find efficient solutions to the looming capacity crisis”.
Protectionism and Trade Wars: Dark Clouds Looming on the Runway
The US President Donald Trump’s decision to impose a large number of tariffs on steel imports has not gone unnoticed by the IATA’s Ceo. While referring to the increasing import tariffs, the IATA did not refrain from accepting that a trade war could well be around the corner. The Ceo warned,”the spectre of a trade war looms”. And the repercussions would be most felt by the aviation industry that alone transfers one-third of the world’s cargo.
The trade wars that loom over the world economy has been slowly building up all along the way. The very fabric of trust that binds nations together despite the varying diversities has weakened over the years. “High taxes, costly and ill-conceived regulation, infrastructure capacity constraints, market shifts and the demands of labour are the ‘normal’ repertoire.”, said de Juniac.
Developed Nations seems plagued by the rage over migration and immigration. The lure of protectionism will subsume successful international joint ventures fueled mainly by Sanctions, tariffs, and geopolitical conflicts. The growing forces of protectionism have taken over the powers. “The spectre of trade war looms. And trust among nations is showing fragility” the IATA chief said.
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The Way Ahead For Airlines Industry
Drawing parallels to true freedom, the IATA Ceo showed great faith in the wings of the aviation industry which despite all the congestions has until now managed to fly on an upward curve. In 2017 alone more than four billion passengers flew by air. “Every day, goods, people, investment, and ideas are connected by aviation. That directly supports 63 million jobs and improves the quality of life for all,” de Juniac said. Some key solutions that can help check regulations include:
- Smarter regulation to counter the trend of creeping re-regulation.
- Efficient solutions to the looming capacity crisis.
- Strict Adherence to the global standards agreed upon in the first place.
Fuel Costs are expected to rise by 25%. But with passenger demand set to shoot up by 7 percent and cargo by 4 percent, the aviation industries future looks promising but not without challenges. Claiming Aviation Industry as an epitome of freedom, Alexandre de Juniac promised to meet the challenges with resolve and in the process build partnerships and understanding that foster global growth.
