Leaders of the global air transport industry gathered in Seoul, Republic of Korea, for the 75th IATA Annual General Meeting (AGM) and World Air Transport Summit (WATS) under the theme, “The Vision for the Future;” hosted by Korean Air, and held for the first time in the Republic of Korea.
The event which also coincided with the 50th Anniversaries of Korean Air and Airbus, the European Aircraft Manufacturer, attracted more than 1000 top leaders (a record number in IATA’s history) from among IATA’s 291 member airlines, their suppliers, governments, strategic partners, international organizations and the media.
Welcoming guests to the country, Kim Hyun-mee, Minister of Land, Infrastructure and Transport of the Republic of Korea, said: “I am pleased to witness Korea’s first hosting of the IATA Annual General Meeting, which has been called the “UN General Assembly for the field of aviation.” The Republic of Korea’s aviation industry has achieved remarkable growth thanks to the support of IATA and its members, as well as to efforts made by airlines like Korean Air.
She added that; “Though Korea ranks 109th in the world in terms of physical area, the network of air routes crisscrossing Korean airspace is the seventh largest in the world with a total of 93 airlines now closely connecting the Republic of Korea to 183 cities in 53 countries around the world. Furthermore, the Republic of Korea transports approximately 120 million passengers annually, and Incheon International Airport, which opened its second passenger terminal last year, has grown into one of top five airports in the world,” she remarked.
Giving credence to her comments, Alexandre de Juniac, IATA’s Director General and CEO said: “We are delighted to bring the AGM to Seoul. Six of IATA’s members are based in the Republic of Korea. The country’s aviation sector supports 838,000 jobs and $47.6 billion of the country’s GDP. Korea is expected to be among the top ten passenger markets in 2036. With the right policy environment, the aviation sector will potentially support 1.5 million jobs and $138 billion in economic activity here in 20 years.”
He added that the Republic of Korea demonstrates what implementing an ambitious vision for connectivity can achieve. This country moved from poverty to the world’s 11th largest economy in a few decades. Strong transport links supported a successful export-led strategy. Incheon Airport is part of that success—famous for customer centricity, efficiency and affordability.
He therefore called on other governments to take note of the fact that developing infrastructure—airports or air traffic management—lays an economic cornerstone. Careful planning, broad consultation with users, examination of funding options and a keen focus on affordability are the keys to making it successful. The right decisions today will determine the economic and social benefits that will be realized in the future.
The IATA DG cautioned however that a key challenge will be preparing the air transport industry for the future amid the expected doubling of demand for connectivity over the next two decades. In this regard, airline digital transformation, infrastructure capacity, sustainability and building the workforce of the future featured prominently in the AGM’s agenda.
He noted that: “2019 is expected to be the 10th consecutive year of airline profits, but rising costs, trade wars and other uncertainties are likely to have an impact on the bottom line. The prolonged grounding of the 737 MAX aircraft is taking its toll. And aviation, like all industries, is under intensified scrutiny for its impact on climate change,” he added.
“2019 will see airlines make a $28 billion profit — that’s $6.12 per passenger. It’s a solid profit under challenging conditions. Passenger demand is robust. But trade wars and protectionist measures are taking their toll on the cargo business. And rising costs for fuel, labor and infrastructure are squeezing margins. Returns will still exceed the cost of capital, but only just. And the industry’s 3.2% net margin is modest and fragile compared to the margins of 20% or more that Apple and Google regularly enjoy,” he stressed.
The European Commissioner for Mobility and Transport, Violeta Bulc, noted that: “transport in general, and aviation in particular, is at an important crossroads right now, which makes regulators and industry talking together more important than ever. The need to simultaneously cut emissions, increase capacity and adapt to new technologies were some of the issues she highlighted as challenges facing the industry. She therefore stressed that: “Both decarbonisation and digitalisation will disrupt traditional aviation.”
Looking to the future, the IATA DG opined that the outlook is optimistic. “Demand is forecast to double over the next two decades. With the cost of travel 40% lower than a decade ago, the freedom to fly is reaching more people than ever. Aviation today is far from being an industry for the rich. The developing markets are expected to provide the majority of additional passenger demand. India and China alone are forecast to account for around 45% of all additional passenger trips over the next two decades. Even more than today, the travelers of the future will come from all walks of life and economic means.
“Unfortunately, creeping protectionist or isolationist political agendas are on the rise. And they threaten to compromise the value our industry creates. For aviation to be a catalyst of prosperity, borders must be open to people and to trade.
“Aviation enables globalization. Since 1990, on average, globalization has lifted 130,000 people a day from poverty. The more people connect through flying, the greater the benefits to all the people of this world. That’s an important message for governments to hear,” he concluded.