Leisure and business travel to Japan continue to plummet, as the damaged nuclear reactor continues to leak radiation and scare Japanese and non-Japanese alike. According to Argophilia Travel News (http://www.argophilia.com/), international companies - most of which are deferring non-essential staff travel - report cancelling planned business trips to Japan at rates that range from 60 to 95 percent.
This despite the fact that airlines say they are operating safely during the crisis. The various disruptions of daily life - reduced electrical power, shortages of gasoline, water and food in the northeast of the country, earthquake aftershocks, psychic shock - are overwhelming what good news is coming out of Japan - and, happily, there is some.
Here, edited slightly for length, is the latest statement from the International Air Transport Association (http://www.iata.org/), released over the weekend at IATA's Geneva headquarters:
"The International Air Transport Association welcomed the joint statement issued by the International Civil Aviation Organization (ICAO) on behalf of the International Atomic Energy Agency (IAEA), International Maritime Organization (IMO), the World Health Organization (WHO) and the World Meterological Organization (WMO) on the continued safety of air transport operations in Japan. These five organizations confirmed that there are no restrictions to normal air transport operations at Japan's major airports, including both Haneda and Narita (Tokyo's international airports).
"Safety is our number one priority. If it is not safe, we won't fly. Today's joint statement by the five most authoritative United Nations organizations on air transport, nuclear energy, shipping, health and weather confirms that it is safe to operate in Japan,'' said Giovanni Bisignani, IATA's director general and chief executive officer.
"The ICAO statement further confirmed that there are no health reasons that would require the screening of passengers emanating from Japan. Moreover, the organizations confirmed that there is no health risk associated with increased levels of radiation that have been detected at some airports. Although not recommended by the UN organizations, several states are implementing screening programs for passengers and flights from Japan.''
The IATA statement continues: "The situation is evolving quickly and is being constantly monitored. Today, the advice is that normal operations are possible. If the advice changes, the industry will comply and transparently keep all informed of the developments,'' said Bisignani.
Showing posts with label Giovanni Bisignani. Show all posts
Showing posts with label Giovanni Bisignani. Show all posts
Monday, March 21, 2011
Monday, January 3, 2011
Heroes and Zeroes in Travel 2010
You have your heros and you have your zeroes when it comes to leaders in the travel industry. The year just passed had an abundance of both. Here is a shortlist of people who made waves, for good or otherwise, in 2010, starting with the good guys:
HEROES
Ray LaHood, Secretary of Transportation, U.S.: Lahood, to his credit, has tried to make sense of the crazy-quilt of transportation policy. In 2010, he gave passenger rights some long-awaited teeth by approving hefty fines for U.S. domestic carriers that park planefuls of passengers on the tarmac for three hours or more on domestic flights. Coincidence or no, long waits on the tarmac fell markedly when the new rules came into effect, perhaps because airlines cancelled more flights. Long waits during the recent East Coast snow and ice storms for arriving passenger jets flown by international carriers may mean the rules could tighten for those carriers, too.
Kate Hanni, head of Flyersrights.org. Some critics say Hanni, a former realtor and singer in a rock band, has not met a camera or microphone she doesn't like. True or not, Hanni is a articulate spokesperson for the rights of air travelers, especially in the U.S., and her effective advocacy spurred airlines to be more aware of customer service and resulted in the tarmac delay fines cited above.
Kevin Mitchell, head of the Business Travel Coalition. Mitchell, whose group has represented corporate travel planners since the mid-1990s, was again a persistent and well-spoken advocate for transparency in travel, especially when it comes to air fares and disclosure of extra airline ticket fees.
Giovanni Bisignani, outgoing director general of the Geneva-based International Air Transport Association. For eight years the head of IATA, the trade group for most of the world's major airlines, the former head of Alitalia turned what had been a moribund talking-shop into a leading global advocate of fair-minded ownership rules, rational routes and pro-active steps to combat aviation's contribution to climate change.
Richard Branson. The British billionaire and chief of London's Virgin Group. For embracing fun in air travel and reviving a bit of the cheeky entrepreneurship that characterized the airline industry in earlier times.
Hero of the Year: Southwest Airlines CEO Gary Kelly, for holding out against charging stiff fees for changing flights and continuing the carrier's consumer-friendly "bags fly free'' policy in the face of escalating luggage-checking fees by nearly everyone else.
ZEROES:
Ben Baldanza, CEO of Spirit Airlines, a U.S. low-cost airline that became the first airline in the land to start charging customers for carry-on bags.
Michael O'Leary, the CEO of Ireland's ryanair. The Ebenezer Scrooge of airline executives, he called for charging passengers for using the loo. It hasn't happened yet, but even if it's a publicity stunt, it's a suggestion too far.
Zero of the Year: No contest: Steven Slater, Steven Slater, Steven Slater. The cursing, beer-snatching JetBlue flight attendant who, claiming a passenger had hit and scratched him, deployed the emergency escape shute and left his post and his job when his flight landed at New York's John F. Kennedy International Airport. An exhaustive investigation turned up no such passenger and not one person on the flight backed Slater's story. He was arrested and agreed to accept court-imposed psychological counseling.
HEROES
Ray LaHood, Secretary of Transportation, U.S.: Lahood, to his credit, has tried to make sense of the crazy-quilt of transportation policy. In 2010, he gave passenger rights some long-awaited teeth by approving hefty fines for U.S. domestic carriers that park planefuls of passengers on the tarmac for three hours or more on domestic flights. Coincidence or no, long waits on the tarmac fell markedly when the new rules came into effect, perhaps because airlines cancelled more flights. Long waits during the recent East Coast snow and ice storms for arriving passenger jets flown by international carriers may mean the rules could tighten for those carriers, too.
Kate Hanni, head of Flyersrights.org. Some critics say Hanni, a former realtor and singer in a rock band, has not met a camera or microphone she doesn't like. True or not, Hanni is a articulate spokesperson for the rights of air travelers, especially in the U.S., and her effective advocacy spurred airlines to be more aware of customer service and resulted in the tarmac delay fines cited above.
Kevin Mitchell, head of the Business Travel Coalition. Mitchell, whose group has represented corporate travel planners since the mid-1990s, was again a persistent and well-spoken advocate for transparency in travel, especially when it comes to air fares and disclosure of extra airline ticket fees.
Giovanni Bisignani, outgoing director general of the Geneva-based International Air Transport Association. For eight years the head of IATA, the trade group for most of the world's major airlines, the former head of Alitalia turned what had been a moribund talking-shop into a leading global advocate of fair-minded ownership rules, rational routes and pro-active steps to combat aviation's contribution to climate change.
Richard Branson. The British billionaire and chief of London's Virgin Group. For embracing fun in air travel and reviving a bit of the cheeky entrepreneurship that characterized the airline industry in earlier times.
Hero of the Year: Southwest Airlines CEO Gary Kelly, for holding out against charging stiff fees for changing flights and continuing the carrier's consumer-friendly "bags fly free'' policy in the face of escalating luggage-checking fees by nearly everyone else.
ZEROES:
Ben Baldanza, CEO of Spirit Airlines, a U.S. low-cost airline that became the first airline in the land to start charging customers for carry-on bags.
Michael O'Leary, the CEO of Ireland's ryanair. The Ebenezer Scrooge of airline executives, he called for charging passengers for using the loo. It hasn't happened yet, but even if it's a publicity stunt, it's a suggestion too far.
Zero of the Year: No contest: Steven Slater, Steven Slater, Steven Slater. The cursing, beer-snatching JetBlue flight attendant who, claiming a passenger had hit and scratched him, deployed the emergency escape shute and left his post and his job when his flight landed at New York's John F. Kennedy International Airport. An exhaustive investigation turned up no such passenger and not one person on the flight backed Slater's story. He was arrested and agreed to accept court-imposed psychological counseling.
Friday, July 2, 2010
That Herbert Hoover Feeling
The news comes these days in twos, with good news on one hand and bad news on the other - and major implications for travelers and the travel industry.
Consider:
The American Automobile Association predicts that 34.9 million Americans will take a car trip at least 50 miles from home over this U.S. Fourth of July holiday weekend. That's a leap of 17.1 percent from the 29.8 million who took car trips over the same holiday last year.
The International Air Transport Association, the airline trade group based in Geneva and Montreal, reports that passenger traffic on the world's airlines jumped 11.7 percent this May from May 2009, while air cargo shipments soared 34.3 percent over May 2009. IATA also forecasts a profit of $2.5 billion USD for global airlines this year, a big upgrade from the $9.9 billion USD loss the airlines suffered in 2009.
Just as this welcome news arrives, however, the larger economy in the U.S. and Europe seems to be grinding to a halt, if not sliding backward. A tepid U.S. jobs report yesterday depressed markets, sending the Dow Jones Industrial Average back below 10,000 - down 5 percent for the week in the steepest drop since the near-depression in October 2008. Moreover, U.S. consumer confidence, as determined by New York research firm the Conference Board, plummeted to 52.9 percent in June from 62.7 percent in May, driven by concern over a lack of jobs and Congress cutting off benefits to the long-term unemployed.
"Economists pay close attention to measures of consumer confidence as a proxy for consumer spending, which drives the bulk of the U.S. economy,'' explained a June 29 report on CNNMoney.com.
There's more: The New York Times's Web site, nytimes.com, today stacked no fewer than six stories on the home page tracking economic slowdown and decline.
Times columnist Paul Krugman, a Noble Prize-winning economist, took it a big step further:
"We are now, I fear, in the early stages of a third depression,'' he wrote, referring to the Great Depression of the 1930s and a long depression in the U.S. after the Panic of 1873.
"And this third deprssion will be primarily a failure of policy. Around the world ... governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. ... Both the United States and Europe are well on their way toward Japan-style deflationary traps.''
Reading these signs and portents is enough to induce a sinking feeling - that Herbert Hoover feeling, to be exact.
Hoover, of course, was the U.S. President who presided over the Wall Street crash of 1929 and whose policies only made matters worse. Things improved under his successor, Franklin D. Roosevelt, but then Roosevelt slowed stimulus spending in 1938, leading to relapse in an economy not yet recovered from the collapse of 1929-31. We all know what happened next: World War II. If that tragedy hadn't occurred, we might still be in the Great Depression, for it was only wartime spending that ended the depression - at huge human cost.
What does all this macro-economic stuff and political history mean for travel? Plenty.
For one thing, even the good travel news contains signs that not all is actually well.
Giovanni Bisignani, the outspoken IATA director-general, said of the rise in the civil aviation business, "This is good news, but it is only a 0.5 percent margin. We are still a long way from sustainable profitability.''
Even the seemingly buoyant AAA forecast is not as encouraging as it looks at first glance. More U.S. motorists will hit the road this holiday weekend, but they are expected to spend less: a median spend of $644 USD this year, down from a median of $693 last year. Motorists seem drawn to the highway partly by the lure of relatively cheap gasoline (a U.S. average of $2.70-$2.80 per gallon) and because they don't want to spend money for airfares, which are up 13 percent in the U.S. from last year. They are not in an expansive, let's-spend-it mood.
If international economies stop recovering or even contract, travel will be among the first to feel it. Fewer people will travel. Those who do will spend less. Already stressed hotels, cruise ship lines and airlines will cut capacity, have to cut their rates and lay off staff. By some measures, tourism is the world's leading industry by production of revenue, and most travel-industry employees are working-class people - many of them living in developing countries - who will quickly fall on hard times if we really are in a third depression.
Sorry for the gloomy, foreboding tone of this post. But the first step toard dealing effectively with crisis is to see it for what it is.
Consider:
The American Automobile Association predicts that 34.9 million Americans will take a car trip at least 50 miles from home over this U.S. Fourth of July holiday weekend. That's a leap of 17.1 percent from the 29.8 million who took car trips over the same holiday last year.
The International Air Transport Association, the airline trade group based in Geneva and Montreal, reports that passenger traffic on the world's airlines jumped 11.7 percent this May from May 2009, while air cargo shipments soared 34.3 percent over May 2009. IATA also forecasts a profit of $2.5 billion USD for global airlines this year, a big upgrade from the $9.9 billion USD loss the airlines suffered in 2009.
Just as this welcome news arrives, however, the larger economy in the U.S. and Europe seems to be grinding to a halt, if not sliding backward. A tepid U.S. jobs report yesterday depressed markets, sending the Dow Jones Industrial Average back below 10,000 - down 5 percent for the week in the steepest drop since the near-depression in October 2008. Moreover, U.S. consumer confidence, as determined by New York research firm the Conference Board, plummeted to 52.9 percent in June from 62.7 percent in May, driven by concern over a lack of jobs and Congress cutting off benefits to the long-term unemployed.
"Economists pay close attention to measures of consumer confidence as a proxy for consumer spending, which drives the bulk of the U.S. economy,'' explained a June 29 report on CNNMoney.com.
There's more: The New York Times's Web site, nytimes.com, today stacked no fewer than six stories on the home page tracking economic slowdown and decline.
Times columnist Paul Krugman, a Noble Prize-winning economist, took it a big step further:
"We are now, I fear, in the early stages of a third depression,'' he wrote, referring to the Great Depression of the 1930s and a long depression in the U.S. after the Panic of 1873.
"And this third deprssion will be primarily a failure of policy. Around the world ... governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. ... Both the United States and Europe are well on their way toward Japan-style deflationary traps.''
Reading these signs and portents is enough to induce a sinking feeling - that Herbert Hoover feeling, to be exact.
Hoover, of course, was the U.S. President who presided over the Wall Street crash of 1929 and whose policies only made matters worse. Things improved under his successor, Franklin D. Roosevelt, but then Roosevelt slowed stimulus spending in 1938, leading to relapse in an economy not yet recovered from the collapse of 1929-31. We all know what happened next: World War II. If that tragedy hadn't occurred, we might still be in the Great Depression, for it was only wartime spending that ended the depression - at huge human cost.
What does all this macro-economic stuff and political history mean for travel? Plenty.
For one thing, even the good travel news contains signs that not all is actually well.
Giovanni Bisignani, the outspoken IATA director-general, said of the rise in the civil aviation business, "This is good news, but it is only a 0.5 percent margin. We are still a long way from sustainable profitability.''
Even the seemingly buoyant AAA forecast is not as encouraging as it looks at first glance. More U.S. motorists will hit the road this holiday weekend, but they are expected to spend less: a median spend of $644 USD this year, down from a median of $693 last year. Motorists seem drawn to the highway partly by the lure of relatively cheap gasoline (a U.S. average of $2.70-$2.80 per gallon) and because they don't want to spend money for airfares, which are up 13 percent in the U.S. from last year. They are not in an expansive, let's-spend-it mood.
If international economies stop recovering or even contract, travel will be among the first to feel it. Fewer people will travel. Those who do will spend less. Already stressed hotels, cruise ship lines and airlines will cut capacity, have to cut their rates and lay off staff. By some measures, tourism is the world's leading industry by production of revenue, and most travel-industry employees are working-class people - many of them living in developing countries - who will quickly fall on hard times if we really are in a third depression.
Sorry for the gloomy, foreboding tone of this post. But the first step toard dealing effectively with crisis is to see it for what it is.
Sunday, June 20, 2010
Flying Blind in Berlin
Earlier this month, German Chancellor Angela Merkel announced that her government intends to impose a new tax on air travelers departing from German airports. The amount of the tax - expected to add from 8 to 16 euros per ticket to air fares - will be calibrated "depending on factors such as the flight's noise level and fuel consumption,'' according to the Berlin government. In other words, the levy is being positioned as an environmental mitigation tax.
Predictably, top executives for the world's airlines - gathered in Berlin to attend the annual general meeting of the International Air Transport Association and the Berlin Air Show - were appalled.
Airlines, like other businesses, have probably never met a tax they like. But while the airlines' immediate negative reaction is predictable, it is not wrong. Although the tax - expected to raise 1 billion euros ($1.2 billion USD) for Germany's general fund - was introduced as a green measure, Berlin hasn't revealed any details of how it will use the additional billion to help our ever-imperiled environment. In short, this is a deficit-reduction measure, not a green measure. The environment provides political cover for the tax.
The United Kingdom, Ireland and the Netherlands have imposed aviation taxes of their own, citing environmental protection as the rationale. But the UK's monies haven't been funneled specifically to environmental protection as far as I have been able to discover. The Netherlands actually repealed its tax after just a year; it collected 300 million euros, but found that travelers were booking flights out of neighboring countries instead of paying rising fares at Dutch airports.
IATA's director general, Giovanni Bisignani, rightly characterizes Merkel's move as "a cash-grab by a cash-starved government.'' Efforts to go green should be global, not national or regional, he says, and a new tax will damage struggling European airlines. In 2009, the world's airlines lost more than $9 billion USD; it was the worst year in aviation history. In 2010, IATA expects airlines to earn $2.5 billion globally, but German and other European carriers - hammered by weak economies and the Iceland volcanic ash cloud - will lose $2.8 billion USD.
The new tax will make their recovery even harder than it already is, Bisignani argues. German carriers fear they'll be at a competitive disadvantage and won't be able to pass the full cost of the tax along to their customers. If that proves true, the carriers will have to eat the cost.
"This tax is a body blow to the weak economy and a fragile industry,'' Bisignani says. "And it is a kick in the teeth to travelers at a time when they can least afford it.''
The bottom-line is this: Everyone wants to protect, and if possible heal, the environment. Civil aviation contributes 2 percent of global greenhouse gas emissions - less than cars and trucks and much less than heavy industry - but that percentage is expected to grow to 3 percent as air travel itself continues to grow. Travel and aviation must do their share to bring things under control. The question is: What is the best way to go about doing it?
Not this.
Bisignani was sardonic about the German new tax, fuming "What will this do for the environment? Absolutely nothing.'' However, his criticism has a constructive side, as well. "If the chancellor is serious about aviation and climate change,'' he has said of Merkel, "the focus should be on finding a globally coordinated solution at the International Civil Aviation Organization in advance of the climate talks in Cancun.''
He has a point. The airlines have their own interests at heart, to be sure - as they must - but there have got to be more comprehensive and imaginative ways to deal with climate change than slapping on a vague new tax. And, I may add, more honest and straightforward ways.
For now, at least, it looks as though Berlin is flying blind.
Predictably, top executives for the world's airlines - gathered in Berlin to attend the annual general meeting of the International Air Transport Association and the Berlin Air Show - were appalled.
Airlines, like other businesses, have probably never met a tax they like. But while the airlines' immediate negative reaction is predictable, it is not wrong. Although the tax - expected to raise 1 billion euros ($1.2 billion USD) for Germany's general fund - was introduced as a green measure, Berlin hasn't revealed any details of how it will use the additional billion to help our ever-imperiled environment. In short, this is a deficit-reduction measure, not a green measure. The environment provides political cover for the tax.
The United Kingdom, Ireland and the Netherlands have imposed aviation taxes of their own, citing environmental protection as the rationale. But the UK's monies haven't been funneled specifically to environmental protection as far as I have been able to discover. The Netherlands actually repealed its tax after just a year; it collected 300 million euros, but found that travelers were booking flights out of neighboring countries instead of paying rising fares at Dutch airports.
IATA's director general, Giovanni Bisignani, rightly characterizes Merkel's move as "a cash-grab by a cash-starved government.'' Efforts to go green should be global, not national or regional, he says, and a new tax will damage struggling European airlines. In 2009, the world's airlines lost more than $9 billion USD; it was the worst year in aviation history. In 2010, IATA expects airlines to earn $2.5 billion globally, but German and other European carriers - hammered by weak economies and the Iceland volcanic ash cloud - will lose $2.8 billion USD.
The new tax will make their recovery even harder than it already is, Bisignani argues. German carriers fear they'll be at a competitive disadvantage and won't be able to pass the full cost of the tax along to their customers. If that proves true, the carriers will have to eat the cost.
"This tax is a body blow to the weak economy and a fragile industry,'' Bisignani says. "And it is a kick in the teeth to travelers at a time when they can least afford it.''
The bottom-line is this: Everyone wants to protect, and if possible heal, the environment. Civil aviation contributes 2 percent of global greenhouse gas emissions - less than cars and trucks and much less than heavy industry - but that percentage is expected to grow to 3 percent as air travel itself continues to grow. Travel and aviation must do their share to bring things under control. The question is: What is the best way to go about doing it?
Not this.
Bisignani was sardonic about the German new tax, fuming "What will this do for the environment? Absolutely nothing.'' However, his criticism has a constructive side, as well. "If the chancellor is serious about aviation and climate change,'' he has said of Merkel, "the focus should be on finding a globally coordinated solution at the International Civil Aviation Organization in advance of the climate talks in Cancun.''
He has a point. The airlines have their own interests at heart, to be sure - as they must - but there have got to be more comprehensive and imaginative ways to deal with climate change than slapping on a vague new tax. And, I may add, more honest and straightforward ways.
For now, at least, it looks as though Berlin is flying blind.
Friday, April 23, 2010
Aviation After the Ashes
Now that the skies are apparently clearing of volcanic ash over most of northern and western Europe, it's time for the travel industry - especially the aviation wing - to figure out what to do if it happens again. Decisions made now will shape the holiday travel plans and business decisions of millions of travelers.
There's no predicting exactly how or when a volcano will erupt, but some of the devastation to travel that we've seen from the giant cloud of volcanic ash over the last 10 days could be mitigated if there is a good plan in place. Not having a clear, coordinated response to the aviation shutdowns posed by the ashes from Iceland cost the world's airlines an estimated $1.7 billion USD through Tuesday in lost revenue, according to the International Air Transport Association. Airports Council International reports that European airports, many of which reduced flights or shut down entirely during parts of the crisis, have lost an additional $250 million USD. When the bill is totalled, costs will probably soar somewhere north of $2 billion USD.
For airlines already reeling from a toxic combination of security scares, pandemic scares, global recession and volatile fuel prices, this is a serious blow. Giovanni Bisignani, the outspoken head of IATA, put his finger on it when he noted "For an industry that lost $9.4 billion USD last year and was forecast to lose a further $2.8 billion USD in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation. Europe's carriers were already expected to lose $2.2 billion USD this year - the largest in the industry.''
Bisignani, who has crusaded for years for a 'single European sky' - that is, a unified, continental air-traffic control system to replace the current 27 national systems in the European Union - was scathing in his criticism of European transport ministers. He noted it took three days for the ministers to get on the telephone for a conference call, by which time the crisis was well underway.
The lack of a coordinated response was noted by many.
In a feature story today Reuters news service comments "At one point, most Dutch and French airspace was open, Germany was open for visual take-off and landing only, and Britain was entirely closed. Tens of thousands of flights were cancelled and millions of people have had their travel disrupted over the last nine days.''
The notion of a single European sky gained some traction this morning when Spain's transport minister, Jose Blanco, told reporters that Eurocontrol, an agency that coordinates between national air-traffic control systems, should simply take over air-traffic control duties directly in the 27 EU states.
"This week has shown the need to carry out a joint reflection on improving Europe's mechanisms in reacting to situations like this,'' Reuters quoted Blanco as saying.
Bisignani and others are already calling for financial compensation to airlines charged with feeding and billeting stranded passengers in a crisis not of their making. Airports want to be compensated, too. Whether or not this happens, there is precedent for it: The United States set up a temporary loan program worth $5 billion USD for U.S. carriers after the terrorist attacks of Sept. 11, 2001, shut down North American airspace for three days. National governments are strapped for money right now, but the idea should not be dismissed out of hand.
If nothing else, the air travel shutdowns - a temporary boon to trains, hotels and car rental firms, certainly - showed just how dependent we are on air travel. The Sydney-based Centre for Asia Pacific Aviation sums it up well:
"Our whole global economy is built around fast movement of high-value products, from fresh produce through computer products, car parts, urgent medical supplies and even gold. More economically important even than that, entire supply chains rely on immediate delivery of ingredient products for manufacturing and retailing. Thus, there is a near-endless variety of affected companies and consumers as the blockage moves downstream.
"Then there is the world's largest industry, tourism. The disruption to tourism flows caused by the European grounding stretches far beyond the local impact, with all the potential tourists by air also being prevented from flying in either direction.''
In short, a fine mess. Let's not let it happen again.
There's no predicting exactly how or when a volcano will erupt, but some of the devastation to travel that we've seen from the giant cloud of volcanic ash over the last 10 days could be mitigated if there is a good plan in place. Not having a clear, coordinated response to the aviation shutdowns posed by the ashes from Iceland cost the world's airlines an estimated $1.7 billion USD through Tuesday in lost revenue, according to the International Air Transport Association. Airports Council International reports that European airports, many of which reduced flights or shut down entirely during parts of the crisis, have lost an additional $250 million USD. When the bill is totalled, costs will probably soar somewhere north of $2 billion USD.
For airlines already reeling from a toxic combination of security scares, pandemic scares, global recession and volatile fuel prices, this is a serious blow. Giovanni Bisignani, the outspoken head of IATA, put his finger on it when he noted "For an industry that lost $9.4 billion USD last year and was forecast to lose a further $2.8 billion USD in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation. Europe's carriers were already expected to lose $2.2 billion USD this year - the largest in the industry.''
Bisignani, who has crusaded for years for a 'single European sky' - that is, a unified, continental air-traffic control system to replace the current 27 national systems in the European Union - was scathing in his criticism of European transport ministers. He noted it took three days for the ministers to get on the telephone for a conference call, by which time the crisis was well underway.
The lack of a coordinated response was noted by many.
In a feature story today Reuters news service comments "At one point, most Dutch and French airspace was open, Germany was open for visual take-off and landing only, and Britain was entirely closed. Tens of thousands of flights were cancelled and millions of people have had their travel disrupted over the last nine days.''
The notion of a single European sky gained some traction this morning when Spain's transport minister, Jose Blanco, told reporters that Eurocontrol, an agency that coordinates between national air-traffic control systems, should simply take over air-traffic control duties directly in the 27 EU states.
"This week has shown the need to carry out a joint reflection on improving Europe's mechanisms in reacting to situations like this,'' Reuters quoted Blanco as saying.
Bisignani and others are already calling for financial compensation to airlines charged with feeding and billeting stranded passengers in a crisis not of their making. Airports want to be compensated, too. Whether or not this happens, there is precedent for it: The United States set up a temporary loan program worth $5 billion USD for U.S. carriers after the terrorist attacks of Sept. 11, 2001, shut down North American airspace for three days. National governments are strapped for money right now, but the idea should not be dismissed out of hand.
If nothing else, the air travel shutdowns - a temporary boon to trains, hotels and car rental firms, certainly - showed just how dependent we are on air travel. The Sydney-based Centre for Asia Pacific Aviation sums it up well:
"Our whole global economy is built around fast movement of high-value products, from fresh produce through computer products, car parts, urgent medical supplies and even gold. More economically important even than that, entire supply chains rely on immediate delivery of ingredient products for manufacturing and retailing. Thus, there is a near-endless variety of affected companies and consumers as the blockage moves downstream.
"Then there is the world's largest industry, tourism. The disruption to tourism flows caused by the European grounding stretches far beyond the local impact, with all the potential tourists by air also being prevented from flying in either direction.''
In short, a fine mess. Let's not let it happen again.
Friday, January 29, 2010
More Travel Turbulence Ahead?
The United States economy grew by a healthy 5.7 percent in the fourth quarter of 2009, according to the first estimate by the U.S. Commerce Department. Well, we'll see. The Commerce Department twice lowered healthy-sounding reports of growth for the previous quarter, after more data came in. Will the same thing happen again?
Me, I am not yet convinced that we are seeing those much-touted green shoots of recovery. Virtually no one I talk to - not the operator of our local laundry, not the contractor who is doing work on our house, not the owner of a private school, not most people I know or companies I follow in the travel business - thinks we are emerging quickly from the worldwide economic free-fall that started in earnest in 2008.
The latest scary metric comes from the Geneva-based International Air Transport Association,whose member airlines carry 93 percent of the world's air travelers. The year 2009 saw the greatest decline in civil aviation since 1946, according to IATA statistics released this week. Students of history will recall that 1946 was the first year after the end of World War II.
Oh, the petrodollar-fueled Middle East aviation sector still grew (up 11.2 percent) in 2009, as did Latin American traffic (up 7.1 percent). But the much-larger markets of Asia-Pacific, Europe and North America fell - down 5.6 percent, 5.0 percent and 5.6 percent, respectively. Worldwide, passenger demand was down 3.5 percent, though there was some growth in December over the extremely weak month of December 2008.
"In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen,'' says Giovanni Bisignani, the former Al Italia chief who heads IATA as its director general and CEO. "We have permanently lost 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business.''
"Yields have started to improve with tighter supply-demand conditions in recent months, but they remained 5-10 percent down on 2008 levels,'' Bisignani said. "Airlines will lose an expected $5.6 billion USD in 2010.''
So, is the glass half-empty or half-full? I'd like to think it's half-full, but with the exception of unique travel companes such as Southwest Airlines - which, incredibly, declared its 134th consecutive quarterly dividend this past quarter - the major stakeholders in the travel biz such as airlines, hotels, tour operators and cruise lines continue to grapple with turbulent times. Fasten your seatbelts - there's a long way to go.
Me, I am not yet convinced that we are seeing those much-touted green shoots of recovery. Virtually no one I talk to - not the operator of our local laundry, not the contractor who is doing work on our house, not the owner of a private school, not most people I know or companies I follow in the travel business - thinks we are emerging quickly from the worldwide economic free-fall that started in earnest in 2008.
The latest scary metric comes from the Geneva-based International Air Transport Association,whose member airlines carry 93 percent of the world's air travelers. The year 2009 saw the greatest decline in civil aviation since 1946, according to IATA statistics released this week. Students of history will recall that 1946 was the first year after the end of World War II.
Oh, the petrodollar-fueled Middle East aviation sector still grew (up 11.2 percent) in 2009, as did Latin American traffic (up 7.1 percent). But the much-larger markets of Asia-Pacific, Europe and North America fell - down 5.6 percent, 5.0 percent and 5.6 percent, respectively. Worldwide, passenger demand was down 3.5 percent, though there was some growth in December over the extremely weak month of December 2008.
"In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen,'' says Giovanni Bisignani, the former Al Italia chief who heads IATA as its director general and CEO. "We have permanently lost 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business.''
"Yields have started to improve with tighter supply-demand conditions in recent months, but they remained 5-10 percent down on 2008 levels,'' Bisignani said. "Airlines will lose an expected $5.6 billion USD in 2010.''
So, is the glass half-empty or half-full? I'd like to think it's half-full, but with the exception of unique travel companes such as Southwest Airlines - which, incredibly, declared its 134th consecutive quarterly dividend this past quarter - the major stakeholders in the travel biz such as airlines, hotels, tour operators and cruise lines continue to grapple with turbulent times. Fasten your seatbelts - there's a long way to go.
Wednesday, December 30, 2009
Neros Fiddle
They say Nero fiddled while Rome burned. These days, we have got politicians, security-industry functionaries and reflexively defensive bureaucrats around the globe fiddling while globalized terrorists try to light fires on airplanes - or do anything else they can do to harm innocent people. The attempted bombing on symbolically frought Christmas Day of a Delta/Northwest jetliner near Detroit has brought these home-truths to the fore.
In the United States, the Usual Suspects went into action with the speed of a jet plane going wheels-up from a runway.
The U.S. Secretary of Homeland Security, Janet Napolitano, embraced plausible deniablity, implausibly claaiming that "the system worked" after courageous passengers and crew stopped the accused terrorist from taking 300 lives. She had to backtrack the very next day. Now, U.S. President Obama is acknowledging that the expensive systems put in place after the Sept. 11, 2001, attacks in the U.S. have failed and has ordered a top-to-bottom review.
For their part, the opposition Republican Party used the thwarted attack to verbally whack Obama and his team. Even though, as numerous media reports point out, a Republican Senator, one James DeMint, has blocked a Senate vote on Obama's nominee for head of Homeland Security, Erroll Southers, on the grounds that Southers might allow airport security screeners to join unions. And even though Republican legislators voted against increasing federal funds for airport security just this year. Obama-bashers counter, correctly, that Obama waited until September to nominate his choice to fill the Homeland Security post, vacated back in January. Simultaneously, there is no permanent head of U.S. Customs, either, as the administration has let this important border-security service drift without a steady hand on the rudder.
While all these neros point fingers at each other in an endless circle of blame, Rome - that is to say, the civilized world, and the intricate, vulnerable transport system that makes it possible for that world to function - remains under threat by homicidal fanatics.
It's tempting to just throw up your hands and shrug there's nothing to be done. But we can't just do nothing. There were terrorists well before Sept. 11 and there will be terrorists long after today, but that's no reason to forget about them. They are not forgetting about us. They must be stopped. There are many ideas on how to protect travelers - and commuters, and schoolchildren, and people in markets, and innocents at religious services - from cruel attacks. Some of these ideas contradict each other. We don't yet know what response the world of travel will come up with to counter the latest threats, but we need to consider ideas from everywhere - and not just about new high-tech screening devices but ways of thinking pro-actively.
One of the most lucid voices I have heard is that of Giovanni Bisignani, the director-general and CEO of the International Air Transport Administration, the trade group of 230 airlines.
"Instead of looking for bad things - nail clippers and rogue bottles of shampoo - security systems need to focus on finding bad people,'' Bisignani said in a Sept. 30 statement from IATA's Geneva headquarters. "Adding new hardware to an old system will not deliver the results we need. It is time for governments to invest in a process built around a checkpoint of the future that combines the best of screening technology with the best of intelligence-gathering. Such a system would give screeners access to important passenger data to make effective risk assessments. The data are being collected. The technology exists. Industry is supportive.''
This is the kind of wholistic thinking we need.
They say out of crisis comes opportunity. We need to find the opportunity in this crisis, and there is no time to lose in exploiting it.
In the United States, the Usual Suspects went into action with the speed of a jet plane going wheels-up from a runway.
The U.S. Secretary of Homeland Security, Janet Napolitano, embraced plausible deniablity, implausibly claaiming that "the system worked" after courageous passengers and crew stopped the accused terrorist from taking 300 lives. She had to backtrack the very next day. Now, U.S. President Obama is acknowledging that the expensive systems put in place after the Sept. 11, 2001, attacks in the U.S. have failed and has ordered a top-to-bottom review.
For their part, the opposition Republican Party used the thwarted attack to verbally whack Obama and his team. Even though, as numerous media reports point out, a Republican Senator, one James DeMint, has blocked a Senate vote on Obama's nominee for head of Homeland Security, Erroll Southers, on the grounds that Southers might allow airport security screeners to join unions. And even though Republican legislators voted against increasing federal funds for airport security just this year. Obama-bashers counter, correctly, that Obama waited until September to nominate his choice to fill the Homeland Security post, vacated back in January. Simultaneously, there is no permanent head of U.S. Customs, either, as the administration has let this important border-security service drift without a steady hand on the rudder.
While all these neros point fingers at each other in an endless circle of blame, Rome - that is to say, the civilized world, and the intricate, vulnerable transport system that makes it possible for that world to function - remains under threat by homicidal fanatics.
It's tempting to just throw up your hands and shrug there's nothing to be done. But we can't just do nothing. There were terrorists well before Sept. 11 and there will be terrorists long after today, but that's no reason to forget about them. They are not forgetting about us. They must be stopped. There are many ideas on how to protect travelers - and commuters, and schoolchildren, and people in markets, and innocents at religious services - from cruel attacks. Some of these ideas contradict each other. We don't yet know what response the world of travel will come up with to counter the latest threats, but we need to consider ideas from everywhere - and not just about new high-tech screening devices but ways of thinking pro-actively.
One of the most lucid voices I have heard is that of Giovanni Bisignani, the director-general and CEO of the International Air Transport Administration, the trade group of 230 airlines.
"Instead of looking for bad things - nail clippers and rogue bottles of shampoo - security systems need to focus on finding bad people,'' Bisignani said in a Sept. 30 statement from IATA's Geneva headquarters. "Adding new hardware to an old system will not deliver the results we need. It is time for governments to invest in a process built around a checkpoint of the future that combines the best of screening technology with the best of intelligence-gathering. Such a system would give screeners access to important passenger data to make effective risk assessments. The data are being collected. The technology exists. Industry is supportive.''
This is the kind of wholistic thinking we need.
They say out of crisis comes opportunity. We need to find the opportunity in this crisis, and there is no time to lose in exploiting it.
Sunday, June 7, 2009
IATA's Post-Crisis Flight Plan
KUALA LUMPUR, MALAYSIA - The financial news in the airline industry continues to be glum, but the International Air Transport Association today revealed ambitious plans for the world's airlines notwithstanding the present economic downturn.
IATA's Director General and CEO, Giovanni Bisignani, told hundreds of industry-insiders and media at today's annual general meeting that his organization of 226 commercial airlines has set a goal of carbon-neutral growth for the year 2020. Presently, airlines generate about 2 percent of the carbon gases believed to contribute to global warming; the steadily increasing number of flights has led observers to expect that number to rise to 3 percent if left unchecked. Airlines take a good deal of flack from environmentalists and national governments for not being green enough, so this new target is an attempt by the airline industry to meet that criticism.
How will the world's airlines meet this lofty goal?
According to IATA, it's do-able, provided airlines get support from aircraft manufacturers committed to cleaner aircraft. Airlines wouldn't mind seeing some of the trillion or so dollars being handed out in stimulus plans to develop cleaner biotech fuels. Beyond that, airlines think they can cut back on carbon emissions by flying new, more fuel-efficient aircraft, making greater use of bio-fuels and prodding regulators to create a new "single European sky' to replace the many bilteral agreements and zigzag air routes with one streamlined continental system.
Additionally, Bisignani called for harmonization of airport security measures around the world, so that millions of air travelers can expect the same set of rules and procedures wherever they may roam; that's certainly not the case with today's maddening crazy-quilt of rules.
In his annual state of the industry speech, Bisignani - a free-market champion - also called on governments to lift restrictions on foreign investment and the outright purchase of airlines in other nations. The present regime is antiquated, he argued, and nationalistic restrictions on ownership make it difficult for airlines to raise sufficient capital to operate and upgrade. It's hard to argue with him, especially when considering the crumbling state of transportation infrastructure in places such as the United States, where I live. The U.S. restricts foreign ownership of American carriers to 25 percent, partly for reasons of national pride and partly in the believe that this saves jobs from being lost to overseas carriers.
IATA insists this only harms airlines and thus airline passengers. Bisignani summed it up nicely with this tart observation: "All we want is access to global capital, but old rules stand in the way of a healthier industry. If we cannot pay the bills, saving the flag on the tail will not save jobs.''
IATA's Director General and CEO, Giovanni Bisignani, told hundreds of industry-insiders and media at today's annual general meeting that his organization of 226 commercial airlines has set a goal of carbon-neutral growth for the year 2020. Presently, airlines generate about 2 percent of the carbon gases believed to contribute to global warming; the steadily increasing number of flights has led observers to expect that number to rise to 3 percent if left unchecked. Airlines take a good deal of flack from environmentalists and national governments for not being green enough, so this new target is an attempt by the airline industry to meet that criticism.
How will the world's airlines meet this lofty goal?
According to IATA, it's do-able, provided airlines get support from aircraft manufacturers committed to cleaner aircraft. Airlines wouldn't mind seeing some of the trillion or so dollars being handed out in stimulus plans to develop cleaner biotech fuels. Beyond that, airlines think they can cut back on carbon emissions by flying new, more fuel-efficient aircraft, making greater use of bio-fuels and prodding regulators to create a new "single European sky' to replace the many bilteral agreements and zigzag air routes with one streamlined continental system.
Additionally, Bisignani called for harmonization of airport security measures around the world, so that millions of air travelers can expect the same set of rules and procedures wherever they may roam; that's certainly not the case with today's maddening crazy-quilt of rules.
In his annual state of the industry speech, Bisignani - a free-market champion - also called on governments to lift restrictions on foreign investment and the outright purchase of airlines in other nations. The present regime is antiquated, he argued, and nationalistic restrictions on ownership make it difficult for airlines to raise sufficient capital to operate and upgrade. It's hard to argue with him, especially when considering the crumbling state of transportation infrastructure in places such as the United States, where I live. The U.S. restricts foreign ownership of American carriers to 25 percent, partly for reasons of national pride and partly in the believe that this saves jobs from being lost to overseas carriers.
IATA insists this only harms airlines and thus airline passengers. Bisignani summed it up nicely with this tart observation: "All we want is access to global capital, but old rules stand in the way of a healthier industry. If we cannot pay the bills, saving the flag on the tail will not save jobs.''
On a Wing and a Prayer
KUALA LUMPUR, MALAYSIA - There is a bright green arrow on the ceiling of my room at Traders Hotel; it points to Mecca, so that devout Muslims in this overwhelmingly Muslim country know which direction to face when praying. Airline executives may wish to pray now, too, as their industry's finances continue in free-fall; if only they knew which direction to turn.
That's the emphatically downbeat sentiment right now on the opening day of 65th annual general meeting of the International Air Transport Association, the trade organization for 226 of world's commercial airlines. IATA's numbers-crunchers, unveiling their research here at the confab in Malaysia's capital and largest city, predict airlines will lose $9 billion US this year, nearly double the loss expected just six months ago. That's down from the $10.4 billion US airlines lost in 2008, but it's scant comfort for executives of the world's struggling carriers - and their millions of passengers.
Why should you care? Simply this: If the numbers continue to be bad for much longer, travelers are looking at fewer flights, more-crowded flights, cutbacks of amenities, older airplanes staying longer in the sky, and delays of long-planned cabin and service upgrades. Airlines have to make money to spend money. Right now, most are counting heavy losses.
Giovanni Bisignani, IATA's smart, peppery director general and CEO, couldn't have been more blunt in his annual state of the industry speech in Kuala Lumpur this morning. "Optimists see growth by the end of the year, but pessimists view this as a mirage and expect an L-shaped recovery,'' Bisignani said to hundreds of assembled airline executives, vendors and suppliers and world media. "I am a realist. I don't see facts to support optimism.''
"After Sept. 11, 2001, revenues fell by 7 percent,'' Bisignani said. "This time we face a 15 percent drop with a global recession.''
Airline CEOs were similarly downbeat. At a oneworld alliance press conference this morning - called in part to promote the application for anti-trust immunity in the U.S. and EU for members such as American Airlines and British Airlines, who want to work more closely on lucrative trans-Atlantic routes - airline honchos' faces were long.
Oneword managing partner John McCulloch said alliance members are concentrating this year on paring their costs. He didn't specify how that will be done, but the implications are not encouraging for consumers who value comfort and convenience in travel.
"It will be a very difficult time for some time to come, I believe,'' Cathay Pacific Airways CEO Tony Tyler sighed. There was more of the same from British Air's CEO, Willie Walsh: "Everyone is facing a weak economic environment and weak consumer confidence,'' Walsh said.
So, where do we go from here?
We'll learn more about that as the meeting unfolds. I'll be posting throughout, with an emphasis on what's new and what airline corporate flight plans will mean for travelers.
That's the emphatically downbeat sentiment right now on the opening day of 65th annual general meeting of the International Air Transport Association, the trade organization for 226 of world's commercial airlines. IATA's numbers-crunchers, unveiling their research here at the confab in Malaysia's capital and largest city, predict airlines will lose $9 billion US this year, nearly double the loss expected just six months ago. That's down from the $10.4 billion US airlines lost in 2008, but it's scant comfort for executives of the world's struggling carriers - and their millions of passengers.
Why should you care? Simply this: If the numbers continue to be bad for much longer, travelers are looking at fewer flights, more-crowded flights, cutbacks of amenities, older airplanes staying longer in the sky, and delays of long-planned cabin and service upgrades. Airlines have to make money to spend money. Right now, most are counting heavy losses.
Giovanni Bisignani, IATA's smart, peppery director general and CEO, couldn't have been more blunt in his annual state of the industry speech in Kuala Lumpur this morning. "Optimists see growth by the end of the year, but pessimists view this as a mirage and expect an L-shaped recovery,'' Bisignani said to hundreds of assembled airline executives, vendors and suppliers and world media. "I am a realist. I don't see facts to support optimism.''
"After Sept. 11, 2001, revenues fell by 7 percent,'' Bisignani said. "This time we face a 15 percent drop with a global recession.''
Airline CEOs were similarly downbeat. At a oneworld alliance press conference this morning - called in part to promote the application for anti-trust immunity in the U.S. and EU for members such as American Airlines and British Airlines, who want to work more closely on lucrative trans-Atlantic routes - airline honchos' faces were long.
Oneword managing partner John McCulloch said alliance members are concentrating this year on paring their costs. He didn't specify how that will be done, but the implications are not encouraging for consumers who value comfort and convenience in travel.
"It will be a very difficult time for some time to come, I believe,'' Cathay Pacific Airways CEO Tony Tyler sighed. There was more of the same from British Air's CEO, Willie Walsh: "Everyone is facing a weak economic environment and weak consumer confidence,'' Walsh said.
So, where do we go from here?
We'll learn more about that as the meeting unfolds. I'll be posting throughout, with an emphasis on what's new and what airline corporate flight plans will mean for travelers.
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