A COORDINATED 'HOLY TRINITY': the name of the game

In a new series of news and views, our International Correspondent, Professor Inderjit Singh, puts forward his thoughts about industry cooperation.
 
Bigger aircraft, swankier airports and luxurious services are capturing many travellers’ imagination.  The promise of world-class services should guarantee a smooth journey from home to destination, but something along the line is lacking.  Apparently all is not well.
This is, perhaps, a strange reflection in the face of an unprecedented surge in air traffic volumes, allied to a corresponding growth in airports and airport infrastructure worldwide.  Legacy, network and low-cost carriers are mushrooming, and the demand on aircraft manufacturers is huge.
Mounting losses in the airline industry over recent years have been dominating and disturbing.  According to IATA statistics, after a decade of losses totalling US$50 billion, there has been a profit of US$15.1 billion in 2010.  However, net margin remains weak at 2.7%.  Though this marginal profit is welcome, it is significantly short of even covering the cost of capital at 7- 8% and is thus not, at least as yet, a reason for celebrations.
Airport operators worldwide are seeking continued financial support through User Development Fees (UDF) and Airport Development Fees (ADF), producing much resentment from the airlines and passengers.  These ventures were conceived not only to be self sustaining but at the same time contribute to the national exchequer.
So why is our industry in crisis?
Exactly what is ailing the international aviation industry?
Among the reasons, I believe, is that there may be a lack of balance.  A lack of balance in growth, mismatched levels of investment or a lack of interaction between the aviation’s three main constituents; airports, airlines and aircraft.
It is this third point that needs to be addressed urgently.  If we can improve relations between this ‘holy trinity’ it will lead to a better understanding between them – an understanding that can only reap benefits for all concerned.  Instead of following archaic inefficient regulations the need is to jointly evolve effective solutions.  There ought to be a paradigm shift in our thinking process.  Innovation should be in and textbook solutions out.
It was as a spokesperson for airports – at an unprecedented joint forum of these three key sectors together; perhaps the first and the last, at Seattle-Tacoma International Airport – that I shared a common platform with airline and aircraft manufacturing representatives at a conference entitled Flight to Prosperity.  The realisation dawned on all concerned that there is a need for a better appreciation and synchronization of their respective agendas and concerns towards collective common goals, ie, safe, secure, and efficient transportation and processing systems across the world airlines and airports.
But that sort of mutual co-operation, rather than a continual battle of wits between the big three remains elusive, though there are a few exceptions.
I have witnessed this phenomenon at a great length from close quarters during my tenure as the Airport Director (Chief Executive) of a major international airport.  This was despite the best and sincere intentions of all the members representing airlines, security, law and order, regulatory bodies, etc, during deliberations in regularly conducted Airport Coordination Committee (ACC) meetings.
Examples of successfully implementing the outcome of such deliberations are few and far between.  The suspicion lurks that each sector has, like the proverbial ostrich, been sticking its head in the sand for too long, immersed in its own world and its own short-term interests and gains without looking around and taking in the bigger picture.  We stand accused by observers outside of the industry – each one of us belonging to the three key sectors of the aviation industry – of being too confined, too content, too secure, and of failing to jointly think about the challenges ahead.
Instant, incisive analysis is paramount, and to do this effectively we need to evaluate each of the industry’s three ‘vital organs’, and how they interact.  There is an imperative need for airports and airlines on the one hand, and airlines and aircraft manufacturers on the other, to communicate better with each other.
It is my strong conviction that the airports and airlines are the two sides of the same coin, though ironically they face in diametrically opposite directions; and the aircraft, the width of the coin, as the binding, inseparable, third dimension.  They need to collaborate more, and make a collective effort to face a whole array of issues together if they are to draw up a blueprint for an efficient, effective, compatible, environment conscious aviation industry generating sustainable profitability.
Giovanni Bisignani the IATA Director General and CEO is doing all this and much more in the airline industry, with the zeal of a crusader and a visionary and the results are astonishing.  His idea of 100% e-ticketing, considered at one stage a dream by sceptics, resulted into a saving of US$ 47 billion to the airline industry in five years.  All this happened because in addition to day-to-day fire-fighting on issues, the focus was on long-term structural changes – a visionary approach.
His vision for 2050 now begins with, among many more initiatives: a very near zero accident rate; biofuels meeting the supply of energy requirements and delays virtually disappearing thanks to global air traffic management.  The value chain will be rebalanced, with risks and profits shared equitably by consolidating a dozen global industry brands supported by regional and niche players delivering value to investors.  Considering the track record of the last two decades, with the industry’s statistics showing the accident rate reduced by 35%, aircraft being 50% quieter and the world-wide airliner fleet 42% more fuel-efficient; the vision seems to be achievable.
This bold and visionary approach combined with coordinated efforts by all the segments of the industry, could possibly bring a turnaround.  The potential benefits from improved relations between airports, airlines and aircraft manufacturers cannot be over-emphasised.
Hence, we want collaboration vis-à-vis confrontation, consensus as opposed to clashes, coordination in place of contradiction; clarity not confusion, cooperation against conflict and coalition instead of collision.  Coordination between the three ‘organs’ of the industry seems to be the name of the game.
Readers’ reactions to my observations shall be welcomed via indi279@gmail.com