Vijay Poonoosamy VP Etihad: Open and connected aviation market

Vijay Poonoosamy VP Etihad: Open and connected aviation market

Airports of Mauritius  hosted the 27th ACI Africa/World Annual General Assembly, Conference and Exhibition. Today the ACI World Annual General Meeting concluded in Mauritius. Airports are a component of a dynamic industry, continually causing and adapting to change, whether from technological developments inside of or external to the industry, generational, regional or local demographic shifts, geopolitical trends or shocks or other forces. The theme of the conference was “Bold leadership in a time of change.”

As the only airline executive  to be on the programme Vijay Poonoosamy, Vice President International Affairs for Etihad Aviation moderated a panel.

Extracts from remarks by the moderator Vijay Poonoosamy,  and President of Hermes.

“According to a World Travel and Tourism Council report the Travel and Tourism sector generated in 2016 more than 292 million jobs globally – that’s 1 in 10 jobs – and its global economic impact is more than 7.6 trillion USD.

It is clearly in the vested interests of all those who benefit from travel and tourism to do what it takes to not only ensure that nothing is done to clip the wings of a sector that creates jobs and makes economies and communities take off but to also ensure that everything is done to develop a strategic and holistic roadmap to promote its safe, secure, sustainable and seamless growth.

The future is no longer what it used to be but all aviation Stakeholders will need to work together to ensure that aviation is able to deliver its full social and economic value.

To that end we must address smartly and intelligently the issues of taxes, connectivity, and sustainability.

On taxes

Too many view air transport as a luxury for the wealthy or as a cash cow and some even as both as thus an easy target for taxation.

In 2012, the World Travel & Tourism Council (WTTC) commissioned research which showed that removing the UK Air Passenger Duty would result in an increase of up to £4.2 billion in GDP and the creation of up to 91,000 jobs.

Germany has a EUR 1B air passenger tax since 2011 which more and more believe that the excise tax is costing the country more money than it brings in. On 21 August this year the German Economy Minister Brigitte Zypries said that she was in favor of abolishing the tax.

The Dutch government introduced a departure tax on air passengers in July 2008 with the aim of raising EUR 300m. It ended costing the Dutch economy EUR 1.2B and was abolished in July 2009.

The Austrian Air Travel Tax will be halved from 1 January 2018 but IATA argues that completely removing the tax would increase international travel by 2.7% and create 1700 jobs in Austria

Legitimate aviation charges that directly support air transport  and are set based on open consultations with relevant stakeholders should be supported whereas aviation taxes should not. This is in line with ICAO Policy Documents  9082 and 86325.

On Sustainability

The CORSIA countdown has begun and all those that fly international services will in all likelihood need to start monitoring their emissions from 2019 whether their State has volunteered for CORSIA or not.

Dealing finally with the European airspace fragmentation which costs at least EUR 3 billion a year and up to 50 million tonnes of carbon dioxide will clearly help.

On Connectivity

Aviation is a key facilitator of tourism as over 52% of international tourists arrive by air – a proportion that is significantly higher for remote destinations and islands. A nation’s competitiveness, including in tourism, is directly related to its international connectivity.

In 2015, the Global Travel Association Coalition, comprising of ICAO, UNWTO, the World Economic Forum, ACI, IATA and WTTC, adopted an Agenda for Growth and Development that emphasised “the need for improved and expanded connectivity” and confirmed that “the continued liberalisation of, both bilateral and multilateral, could provide important opportunities for ensuring the free flow of travel and trade.”

The July 2009 Intervistas Report on Mauritius forecasted that liberalization of market access would increase international traffic to and from Mauritius by 979,000 passengers, reduce air fares by an average of 31%, create 10,400 jobs and increase GDP by MRU 1.26m.

A 2011 Oxford Economics Report showed that aviation and tourism have a significant footprint in the economies of the Indian Ocean Islands of Seychelles, Mauritius, and Maldives, supporting 27.2% of GDP and 187,000 jobs.

In short, an international air access policy that promotes connectivity leads to increased air service levels and lower fares, which in turn stimulate tourism and bring about increased economic growth and employment

A restrictive national policy on air access is indeed a key impediment to travel and tourism whereas a liberal national policy on air access will encourage the competition which is essential to promote better service and better airfares and freight charges and enable more airlines to deliver on their real promises of socio-economic growth and jobs

As pointed out in the 2009 Travel & Tourism Competitiveness Report of the World Economic Forum:

“Governments can have an important impact on the attractiveness of developing the travel and tourism sector, depending on whether the policies that they create and perpetuate support or hinder its development.”

The focus must be on promoting the National Interest which, of course, includes consideration of the National Airline interests but never at the expense of the National Interest.

 

CONCLUSIONS

All of us in aviation know that we must always expect the unexpected!

Disruptions whether man-made or not represent the new normal.

More reason for us to pick our fights and our friends.

Airlines and airports are the two sides of the aviation coin whose value depends on having both sides!

As interdependent partners, we cannot work together on most issues and simply agree to disagree of some issues.

Together we must fight for national, regional and international policies and regulations which promote sustainable development, connectivity and put competition and consumers at the forefront of policy development.

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As the European Commission also affirmed in its 8 June Communication: “Open and connected aviation markets offer better value flights to a greater choice of travel destinations worldwide.”

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