Envisaging the future

The AGM of IATA offered a glimpse into the various market forces shaping the highly competitive aviation industry.

The Annual General Assembly of the International Air Transport Association (IATA), a major industry forum that brings together the leaders of the major airlines and their partners, so as to charter the future of air travel. The two-day meeting covered such areas as the relationship between airlines and manufacturers; insight from the industry’s CEOs; evolving traveler expectations; infrastructure challenges; and ways to make investments into airlines attractive.

IATA commenced its 71st Annual General Meeting (AGM) and World Air Transport Summit in Miami, Florida, with more than 1,000 industry leaders and media in attendance. Ostensibly, aviation leaders from all parts of the worlds were present for the assembly.

“Miami will be the capital of the global air transport industry as its most senior leaders gather to discuss critical issues such as safety, security, sustainability, meeting passenger demands and revitalising the air cargo sector,” observed Tony Tyler, IATA’s Director General and CEO.

IATA announced that Andres Conesa, CEO of Aeromexico, has assumed his duties as Chairman of the IATA Board of Governors for a one-year term, effective immediately. Conesa is the first Mexican to hold this position.

Conesa succeeds Calin Rovinescu, CEO of Air Canada, whose one-year term expired at the conclusion of the Association’s 71st Annual General Meeting (AGM) and World Air Transport Summit in Miami, Florida. Rovinescu will continue to serve on the Board of Governors and the Chair Committee.

The panel on air strategy highlighted that some of the strategies that could create the greatest value in the near-to-medium term value in a dynamic business environment.

“Demand for connectivity remains strong. That’s positive news. But the performance of the industry is multi-tiered. Middle East and Asia-Pacific based carriers led with growth well above the 5.9 percent average, while carriers in Europe and the Americas were below it. And African airlines reported a contraction compared to the previous year,” said Tyler.

With more than 250 operating airlines globally, even the biggest player in the market has just a 2.5 percent market share. All of the panelists surmised that more consolidation would be of benefit, and 125 of 170 respondents in the audience poll agreed. It is expected that industry consolidation will happen much quicker in Asia than it has in Europe and the U.S.

IATA stated that its April passenger growth was up, “showing robust demand growth compared to April 2014. Total revenue passenger kilometers (RPKs) rose 5.9 percent. April capacity increased by 6.1 percent, and load factor slipped 0.1 percentage points to 79.4 percent.”

IATA said domestic traffic grew by 7.2 percent, much greater that international demand, which grew by 5.2 percent year-over-year.

But freight traffic growth has lost momentum, IATA said. Global air freight markets showed a 3.3 percent increase in cargo volumes in April compared with a year ago. Despite a cyclical pick-up in the global economy, acceleration in trade and air freight demand is unlikely in the near term as business confidence and export orders are flat or declining.

“After a volatile start to 2015, the market is settling down, and it is clear that momentum in air freight growth is being lost. First, there is the structural challenge of world trade no longer expanding at a faster rate than domestic production. Layered on top of that trend we now see a weakening of economic indicators in the crucial air cargo markets of Asia-Pacific and Europe,” added Tyler.