ON THE SOAPBOX: Giovanni Bisignani of IATA

Welcome to the July AERBT discourse by a senior member of the travel industry.  Our guest writer for this month is Director General and CEO of IATA (International Air Transport Association) Giovanni Bisignani.  An energetic and popular figure within the airline industry he was previously involved with several Italian industrial companies including Alitalia where his was president for a spell.

"Numbers can tell powerful stories. USD10.4bn is the amount the world’s airlines lost in 2008, a year when the ground shifted and our industry was shaken.  Skyrocketing oil prices dominated the first half of 2008 and global recession was the story of the second half.

We now see massive shifts in 2009.  The industry fuel bill will fall by USD59bn, if oil averages USD56 per barrel for the year.  But rising oil prices anticipating recovery are a great risk.  On top of this, an even bigger negative number is on the horizon: USD80bn.  That is the total revenue that will disappear with falling demand, collapsing yields, broken consumer confidence, and pandemic fears.  The landscape is harsh and we expect airlines will lose USD9bn this year.

The air transport industry is in survival mode. Whether this crisis is long or short, the world is changing.  Even if we try to look beyond the crisis we must recognize that it will not be business as usual.  The assumptions of our past are no longer valid.  After September 11, revenues fell by 7%.  Almost immediately, we returned to growth that was fuelled by strong economies.  This time we face a 15% drop with a global recession.  It is a different world and our future depends on drastic resizing and reshaping by governments, partners and airlines to be even safer, greener and profitable.

Tightening belts is obvious.  Airlines have made a head start.  IATA’s Simplifying the Business programme delivered USD4bn in savings in 2008.  Now we are targeting a further USD10bn annual savings by improving baggage, travel processes and shipping.

But resizing and reshaping is not just a problem for airlines.  Our partners live on our revenues.  They must follow the same approach.   For labour, we cannot reshape without flexibility.  This is not the time for salary increases.  To protect jobs we must modernize work practices and we must all do more with less.  Airlines expect the same from all suppliers and manufacturers.

The biggest job in change must be in our relationship with governments.  It starts with climate change.  Even in a recession, environment is at the top of our agenda. No other industry is as ambitious and no other industry is as united.  Our four-pillar strategy focuses all industry players on addressing climate change together. And no other industry has achieved so much in recent years.  For example, in 2009 emissions will fall 7% with the recession and 2% as a direct result of our strategy.

Biofuels have the potential to reduce our carbon footprint by up to 80%.  IATA set a target of 10% alternative fuels by 2017.  Nobody thought it possible but four airlines have tested biofuels, making certification a reality by 2011.  But where are governments?  Of the trillions of dollars in stimulus funds there is nothing on aviation biofuels.  Governments are too slow to invest, they are too fast to tax.

We must look to the future.  Both the aviation industry and governments want to improve environmental performance.  It is an opportunity to work together.  Our industry has made significant commitments with concrete targets.  The first is to improve fuel efficiency by 1.5% each year until 2020.  We recognize that improved fuel efficiency is not enough.  Our emissions must stop growing.  Last month our Board took a landmark decision.  By 2020, the airline industry will achieve carbon neutral growth.  Demand will continue to increase but any expansion of our carbon footprint will be compensated. 

Airlines are the first global industry to make such a bold commitment, but we cannot do it alone.  ICAO must define binding carbon emissions standards for manufacturers.  Fuel companies must supply eco-friendly fuels and governments must give us access to credits in global carbon markets.  To manage this global sectoral approach, we must account for emissions at a global level, not by state.  IATA will work with ICAO to ensure compliance.  Airlines should get carbon credits for every cent they pay whether in taxes, charges or emissions trading scheme payments.  We should pay only once, not several times.

Reshaping the approach to climate change is only the start.  Our relationship with governments must move from punitive micro-regulation to joint problem solving.  For example, we need better coordination on security.  We must spend our money more wisely focusing on the threats.  One-stop security must be the future and the time has come for harmonization and mutual recognition of standards.

Governments want to protect jobs and stimulate the economy but we need basic commercial freedoms to run our businesses.  The airline industry does not want bailouts.  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.  A prolonged recession could lead to a cash crisis.  This would put at risk 32 million jobs and the lifeblood of the global economy.

What is the opportunity for our future?  Progressive liberalization.  It would be a cheap and effective stimulus.  The logical next step is for the US and Europe to expand Open Skies to Open Aviation.  Access to markets and capital is critical to all of our businesses.

Air transport is a responsible industry in good times and in crisis.  Today’s situation is unprecedented, the most difficult ever.  Governments and partners must understand that we are struggling to survive with a new and harsh reality.  We are, however, resilient and capable of great change.  Together with governments and partners, we must turn challenges into opportunities to be safer, greener and profitable".

Giovanni Bisignani

www.iata.org

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Boeing makes a joint

BOEING has announced another milestone in the assembly of its first 747-8 Freighter by joining the wing to the fuselage.  The 747 programme has secured 78 orders from leading cargo operators and leasing organisations for the new freighter including AirBridge Cargo Airlines, Atlas Air, Cargolux, Cathay Pacific, Dubai Aerospace Enterprise, Emirates, Guggenheim Aviation Partners, Korean Air, Nippon Cargo Airlines and SkyCargo.  The programme is running about two years late.  Boeing claims 747-8 Freighter will offer 16% more revenue cargo volume than the current Dash 400.  Total 747 orders stand at 1,523 including 20 for Lufthansa of a developed version of the freighter. www.boeing.com

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Etihad

ETIHAD, based in Abu Dhabi, has seized on the family market for premium passengers departing or passing through the new Terminal 3.  Introduced is a new service for children with specially trained nannies.  They initially meet and greet the children at the executive lounge entrance before taking them to the family room.  There the children can play with the toys, read books and watch television all under supervision of the nannies that have professional training in childcare and first aid.  Many of the nannies have a background in the hospitality industry, which includes five-star hotels in the Middle East.  The nanny service allows parents much needed time to unwind next door in the First and Business Class lounges and helps provide an adult environment for those other passengers who are not travelling with children.  The airline will shortly open up special family-only check-in desks at the terminal which will be available for all classes. www.etihadairways.com

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Luton to Forli

LUTON AIRPORT last week welcomed Wind Jet the Italian budget airline.  Established in 2003 the carrier is based in Catania, Sicily, and currently operates 14 Airbus 320 series in a mixture of scheduled and charter flights.  It plans to fly twice weekly to Luton from its northern Italy base at Forli, the flights connecting to both Catania and Palermo. Wind Jet is the third new carrier into Luton since May.  El Al has introduced a six times a week service to Tel Aviv which was closely followed by Blue Air, a Romanian low cost carrier which commenced 2 flights per week to Bacau (Romania) on 1 June 2009. w1.volawindjet.it

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Nigeria Virgin sale

VIRGIN NIGERIA will be re-branded over the coming months, the new title reflecting the local ownership and operation of the carrier.  Virgin Atlantic still holds 49% and remains open to serious offers.  In September 2004 the British airline signed a commercial and technical agreement with Nigerian interests which has now run its natural course according to sources within the operator.  In January the Lagos-based airline cancelled its long haul services to Gatwick and Johannesburg citing severe economic conditions.  It recently took delivery of a second Embraer 190 and has a further eight on order expected over the next two years. A further six 190/195s on option would replace the airline’s Boeing 737 fleet when their leases expire in 2011. www.virginnigeria.com

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RwandAir appoints London GSA

RWANDAIR EXPRESS, the national carrier of Rwanda, has rebranded as RwandAir.  With its main operating base at Kigali International Airport it currently operates two 50-seat Canadair CRJs and a single 37-seat DHC-8.  It now flies daily Kigali to Johannesburg, double daily to Nairobi and three times per day to Entebbe.  Following the recent signing of an interline agreement with Brussels Airlines, to code share on direct flights from Brussels to Kigali, RwandAir has also announced the appointment of Flight Directors as their UK GSA (General Sales Agent).  The airline also serves Bujumburra (Burundi) and Kilimanjaro (Tanzania).  Domestic services are offered from Kigali to Gisenyi and Cyangugu.  The airline's two letter designator is 'WB'. www.rwandair.co.uk

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Virgin Atlantic in major cutback

VIRGIN ATLANTIC (VS) is to cancel its daily Chicago flights for this winter and cut back Hong Kong to daily.  This is the second attempt for VS to make Chicago work but it is the hub for United, who have three services a day, and it also competes with American, on four and BA also with three.  The second Hong Kong was introduced to back-up through services to Australia, which will now be restricted in capacity.  Nearly 8% staff, around 600 jobs, will be lost.  Very much earlier than usual Virgin Atlantic announced its financial performance for the previous 12 months noting a sharp deterioration in profitability. www.virginatlantic.com

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ON TOUR: St Petersburg

There is one truly European city that is still not within the scope of the budget airlines and is poorly supported, by which I mean only daily, by British Airways.  In fact it is unfair to blame BA for the lack of flights as with demand they would surely improve their schedule. 

The problem is Russia, described by Winston Churchill over 60 years ago as an “enigma within an enigma”.  Nothing has changed.  Most foreign citizens need a visa to visit the country.  It is a bit of a rigmarole and costs in the region of UKP100, of which the state only gets UKP25, the rest going to "administration".  Many more would visit if the travel rules were loosened.  St Petersburg has far more to offer than Dubai but the Emirates open-gate philosophy makes it an attractive proposition.  Mind you it rains more in Russia’s one time capital.

The St Petersburg of today dates from 1702, making it younger than New York.  It has been rightly described as “The Venice of the North” and is truly one of the great cities of the world.  It was conceived by Peter the Great as the gateway to Europe for Russia.  As a young man he had travelled far, even allegedly working as a shipwright on the Thames at Deptford, and it was his vision that laid out the magnificent city that one sees today.

It is (very) cold in winter

St Petersburg sits on a narrow isthmus linking the Scandinavian seas and Europe’s largest fresh water expanse, Lake Ladoga, as large as Switzerland.  Built on marshland some 40,000 Swedes toiled under terrible conditions constructing bridges, canals, palaces and fortifications.  St Petersburg can be very cold in the winter, the water frozen over.  It is temperate in summer, but also likened to Manchester due to the rain.  Probably the best time for a visit is for the ‘White Nights’ from the end of May until early July.  During this period It does not get dark until after midnight.

What is today St Petersburg has had a variety of names.  It was initially called Petropo, then Pieterburgh and up until 1914 Saint Peterburg (no S).  It then became Petrograd but after Lenin’s death in 1924 it was renamed in his honour, Leningrad.  The current name was adopted in 1991, still without the S in Russian.  The 900-day Siege of Leningrad from 1941 until 1943 by the Nazis still arouses debate, Victory Square, on the Metro in the suburbs, an outstanding memorial to the one million plus casualties.

Russian Civil War

Just to bring readers up to date with current Russian thinking, the victory of the Reds over the Whites in 1921 is now named the Civil War.  The Second World War in Russian terms is called the Great Patriotic War 1941-1945.  Communist times are now called the Soviet Era, and Mikhail Gorbachev, who effectively broke up the USSR, is both loved and hated.  At one time his rating was less then 5% but it seems to have returned to something like equilibrium.  The Russia of current President Dmitry Medvedev seems clean, friendly and safe.  The precautions you take in the cities are the same as anywhere in the world.  The Russians moan about money but certainly the ‘haves’ to have a good standard of living, the shops busy.  Tomatoes in a supermarket came from California.

Stay in central St Petersburg.  It is very walkable and not an expensive city.  A fine Metro system makes travel easy, the décor in some stations are on the tourist must visit list.  The five-star Rocco Forte Astoria is outstanding and very well positioned for most of the sites.  The Corinthia Nevskij Palace has just completed an extensive remodelling.  Brand new is a Holiday Inn with more than 500 guestrooms. 

Start at the Hermitage

Where to start in St Petersburg?  That is easy.  The Hermitage, created around the Winter Palace of Elizabeth, Empress of Russia and daughter of Peter.  It was here in 1917 that the Romanovs were deposed.  Today it is probably the world’s greatest historical museum and worth an article (several articles) of its own.  Catherine the Great’s art collection includes the works of da Vinci, Michelangelo and Rubens.  Under the Soviets the collection was expanded with works by Cezanne, van Gough and Picasso.  There is the ballroom, throne room and concert hall to view, in all over one thousand rooms.  Allow a day and walk quickly for an overview.

Russia for the tourist has been called the land of ABC (another bloody church) and there are a great many of them.  Be selective.  St Isaac’s Cathedral is the largest in the city and took 40 years to build.  In recent times it has regained its ecclesiastic status.  For those with the strength the climb to the high observation platform of the Colonnade is 300 steps, but worth it.  Another worth a visit is the Church of the Spilled Blood, site of the assassination of Alexander II, perhaps Russia’s most enlightened monarch.  Today it is the Museum of the Mosaic.

Canal trip

A canal trip is recommended.  You will pass one palace after another including that of Count Stroganoff, a man who gave his name to a style of cuisine.  The cruiser Aurora is a memorial to the 1917 revolution and the Peter and Paul Fortress is the original fort of Peter I.  All of them are best seen on foot, but it is time consuming.

Through the centuries music and dance has played an important part of the Russian social scene.  Even if you are not into ballet don’t miss out.  The magnificent Mariinsky Theatre is where many of the masterpieces of Tchaikovsky, Khachaturian and Rimsky-Korsakov received their premieres.  But in St Petersburg you are spoilt for choice by theatre and performance.  They are all good.

Another water trip is to Peterhof Palace ‘Versailles by the Sea’ with its wonderful parkland and waterfalls plus room after room of sheer opulence.  The little town of Pushkin is the home of Catherine’s Palace, severely damaged during the Leningrad siege, its restoration during the Stalin years, said to be the finest replica in the world.  The façade is nearly one thousand feet long.  Catherine was born a minor German princess, married a grandson of Peter the Great, and is reputed to have been involved with his murder.  Although she had numerous affairs she never married again. 

On a quiet stretch of the Moika River stands a long yellow building, which was once the residence of the wealthy and respected Yusupov family (and named after them) which saw one of the most dramatic episodes in Russia's history – the murder of Grigory Rasputin in 1916.  Whether he had hypnotic powers is debated to this day, but whatever his skills were they did him no good.  He finished up in the river!

If you think of the yachts and play things of the current bunch of Russian oligarchs nothing has really changed over the years.  The rich get very rich and the poor, poorer.  The rest of us somehow fit in.  The wealth of three centuries is unbelievable but it is on view for all to see.  Expect to come back tired.

www.st-petersburg.world-guides.com

Malcolm Ginsberg

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