The IATA Regional Vice President Peter Cerda’s remarks at Caribbean Aviation Day are as follows:
Good morning Ladies and Gentlemen. It is a pleasure to be here in St. Thomas for our second Caribbean Aviation Day, after being in Barbados in 2007.
This year we are celebrating the 100th anniversary of scheduled commercial aviation. On January 1st, 1914, the airline industry was born with one aircraft, flying one passenger, on one route.
This was the maiden voyage of the world’s first airline – The St. Petersburg-Tampa airboat line.
The passenger was Abram Pheil, a former mayor of St. Petersburg, who paid $400 at an auction for the privilege of that first ticket (equivalent to nearly $10,000 today).
The flight took just 23 minutes across the bay.
Where are we now
This first flight has grown into an industry that will safely transport 3.3 billion passengers and 52 million tons of cargo in 2014.
Today, aviation supports jobs for 58 million people worldwide.
And airlines deliver goods worth some $6.8 trillion, a third of the goods traded internationally by value.
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We have come a long way since the first flight took off in St. Petersburg.
Every minute, 52 airplanes are taking off somewhere around the world. 44,000 miles are flown and 5,700 passengers are boarding an aircraft.
Aviation’s contribution to the Caribbean
The global connectivity built-up over the last century is a critical component of modern economies the world over.
In the Caribbean, tourism and the aviation sector facilitate and support some 140,000 jobs and contribute US$3.12 billion, roughly 7.2% of Caribbean’s GDP.
Airline Financial Picture
The airline industry is celebrating our 100th anniversary year in the black. Globally, airlines are expected to earn a net profit of $18 billion in 2014.
That might sound impressive, but on revenues of $746 billion, this is equivalent to a net profit margin of 2.4%, or $5.42 per passenger carried.
Looking only at Latin America and the Caribbean, the airlines in this region are expected to earn $1.1 billion.
This is a profit of $4.21 per passenger and a net margin of 3.0%. We are in a tough and very competitive business.
Safety is one area, however, where we do not compete. Safeguarding our customers from harm as we transport them around the world is core to the mission of the aviation industry.
As you know, safety has been in the spotlight in recent months. July was an especially sad month for all us of involved with aviation.
Despite the recent tragedies, flying remains by far the safest mode of transportation.
Every day, approximately 100,000 flights take to the sky and land without incident. Nonetheless, accidents do happen. Every life lost recommits us to improve on our safety performance.
It is no secret that safety has been an issue in this region. Even though it is still underperforming the global average, performance is improving.
And airlines on the IOSA registry are leading the way.
ALTA and IATA member carriers in the region that are on the IOSA registry have not experienced a fatality in six years!
That is why we are working with ALTA and governments in the region to broaden its usage as part of the operational approval process.
I am glad to share that in the Caribbean there are 8 airlines that are IOSA certified.
At the same time, IOSA is improving with age. We are rolling out Enhanced IOSA, which will incorporate continuous safety monitoring.
Port of Spain Declaration
We wish to recognize and congratulate ICAO and the Caribbean States on the signing of the Port of Spain Declaration.
This is evidence that this region shares our concerns and is taking firm action to address them.
The goals described in the document set ambitious targets in Safety, Air Navigation and Infrastructure and also establishes a foundation for the implementation of the Global Aviation Safety Plan (GASP) and Global Air Navigation Plan (GANP) in the region.
IATA fully supports this declaration and is committed to work with ICAO, ALTA and all Caribbean States to ensure all of these goals are achieved.
Our members are ready and have significantly invested in on-board technologies to support these targets. And now we need States and ANSPs to transition from planning to implementation.
Allow me to switch gears to taxation, charges and fees. IATA urges and reminds authorities to adhere to the key principles set out by ICAO.
Unfortunately, many governments choose to ignore them. This is a global issue but it seems to be particularly acute in the Caribbean.
Aviation taxes increase the cost of travelling to the Caribbean and make the islands less competitive relative to other destinations:
Taking the islands as a whole, each $1 of ticket tax could lead to:
ä Over 40,000 fewer foreign passengers
ä $20m of reduced tourist expenditure
ä 1,200 fewer jobs
Therefore, Caribbean countries must consider the aviation industry as a key element for tourism development.
In terms of charges, two airports in the region, Montego Bay and Kingston, recently proposed airport tariff increases of over 100% , to attain a return of capital of around 20% a year in US dollars.
Measures such as these do not encourage or support the development of the industry in the region.
The regulators must act strongly and swiftly against such big increases. Governments have to foster positive business environments through consultation with the industry and transparency in order to ensure win-win situations for all.
The issue of taxes and charges in the region transcends the formal breaches of global standards and recommended practices.
The simple truth is that this region is a very expensive place for airlines to do business.
Fuel expense across the Caribbean is around 14% higher than the world average. Typically fuel represents about a third of an airline’s operating costs.
In the case of the Dominican Republic, although fuel charges were recently reduced, tax on international jet fuel still remains high at 6.5%.
Another example is the Bahamas applying a 7% import duty on Jet fuel.
Jet fuel supply is an issue in the region, the complexity of the fuel supply and the seasonal demand is costly and difficult, making fuel costs in the region a challenge for airlines.
In addition, airports are using the fuel concession fees as a source of revenue and we are still waiting to see any of these monies re-invested in improving fuel facilities.
It is well-known that in many parts of the region, demand for air travel far exceeds the supply of runways and terminals.
Just a few weeks ago President Peña Nieto announced that Mexico City would build a new airport.
IATA supports and cooperates with governments and regulators on expansion projects whenever the current infrastructure has been maximized and growth constraints have been identified.
Passenger Experience and Security
However, infrastructure is only one part of the puzzle and there are many other circumstances that need to be considered in order to provide an environment that stimulates growth.
We continuously encourage the revision of existing processes and the use of technology to address bottlenecks at peak operational times at airports.
And as many of you know IATA also cooperates with ACI to resolve these issues.
Several of the airports of the region have already taken advantage of IATA’s Security Access and Egress Assessment Program. Some examples are Punta Cana, Barbados and Montego Bay. Before the end of the year we will also do assessments at Puerto Plata, Kingston and Aruba..
The program aims to improve the passenger flow at security checkpoint with existing technology and infrastructure in order to reduce queue length and times.
Other components where IATA can support all industry players is on the immigration side and what we call One Stop Security, or OSS.
OSS allows passengers that have been screened at the originating airport to a global standard, to connect without being re-screened.
The regulatory framework and the equivalence recognition process need to be put in place to make this vision a reality.
As proposed during last month’s Caribbean API/PNR Day that IATA hosted in Trinidad, we would like to prompt States to look at the Joint Regional Communication Center as a “single window” for API/PNR processing, looking at developing a “common Caribbean territory”.
Some of the direct benefits for inter-island traffic are improved border controls, including potential elimination of outbound immigration, and a faster and more pleasant experience for the passenger.
States that are working on implementing known traveler schemes need to allow for integration of passenger data with other States that feed the Caribbean with tourists, mostly the United States, Canada and Europe.
IATA urges Governments to make a political commitment to pursue this initiative in coordination with CTO to identify mutual benefits for all stakeholders.
The aviation industry has come a long way since the very first flight from St. Petersburg to Tampa 100 years ago.
In one century, we have turned our large planet into one small world. And through it all, one thing has remained constant: when governments support the conditions for a thriving industry the economic benefits are felt by all.
For our industry to deliver the most benefits to the citizens in the Caribbean and spur additional tourism and trade, we need to be able to compete on a level playing field and have the infrastructure capacity needed to grow.
I am confident that if the Caribbean governments continue to strengthen their partnership with the aviation industry, we will deliver the unique transformative economic growth only our industry can deliver, making the second century of aviation in this region even more beneficial than the first.