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Speed, innovation, key for aviation to deliver economic benefits

Speed and innovation will secure our future so that we can continue to deliver these benefits,” said Alexandre de Juniac, IATA’s Director General and CEO at the opening of the IATA World Financial Symposium.

SINGAPORE – The International Air Transport Association (IATA) called for speed and innovation to enable aviation to continue to deliver its vast social and economic benefits.

"Aviation is the business of freedom. We make global mobility ubiquitous. For 63 million people, aviation provides the freedom to earn their livelihood. For 3.8 billion travelers aviation includes the freedom to explore the world, build understanding, develop business, make friendships, visit relatives or make their lives better. Speed and innovation will secure our future so that we can continue to deliver these benefits," said Alexandre de Juniac, IATA’s Director General and CEO.

De Juniac’s comments were made in a keynote speech at the opening of the IATA World Financial Symposium in which he noted that the airline industry is forecast to deliver a collective net profit of US $39.4 billion this year, which would be a record. "We are having a very good year. I am not predicting an end to the good times, but it would be unrealistic to expect them to last forever." He pointed out that profitability is not evenly spread, with significant variations among regions.

Among potential risks de Juniac identified are: a sudden rise in oil prices; an increase in terrorism aimed at aviation and air travel; a sharp economic downturn and a retreat from the principles of free trade by one or more major economies.

"Uncertainty is ahead of us. I am a big believer in speed and innovation. We cannot know the future. But we need to be prepared to react quickly when the environment changes. That’s not easy for any business – and it is a real struggle for process-driven industries like air transport."

Building on the conference theme of the importance of high performing financial departments to support the airline CEO, de Juniac said that the "dream team" for any CEO has high performance across all of its functions, so that effective decisions can be made swiftly."

He also noted that the IATA Financial Committee White Paper has identified key themes for supporting sustained industry financial health, comprising:

  • Advocating for Smarter Regulation
  • Value Chain Optimization
  • Innovation, and
  • More Efficient Processes.

"These themes are already well-established on the IATA agenda and you can count on my continued support for initiatives in all these areas," said de Juniac.

IATA seeks antitrust immunity to address blocked funds in Venezuela
IATA also announced that it filed a request for antitrust immunity with the U.S. Department of Transportation to allow airlines to discuss options to maintain connectivity to Venezuela in light of the Venezuelan government’s continuing refusal to release US$3.8 billion in airline funds.

"The economic situation in Venezuela is grave. And it will be made worse if airlines cannot maintain connectivity as the blocked-funds issue drags on. Despite years of effort by IATA and its members to resolve the issue, there has been little action by the Venezuelan government. We are now asking the US government to approve anti-trust immunity for discussions among airlines focused on maintaining connectivity while the blocked funds crisis persists. This is an escalation of the industry’s efforts to find a solution to this untenable situation," said Alexandre de Juniac.

"To be clear, the intention is not to do anything that is anti-competitive. On the contrary, our member airlines seek to explore a global solution allowing them to keep Venezuela connected to the world and do business normally in a country that is not meeting its international obligations," said de Juniac.

Venezuela’s refusal to allow repatriation of airline revenues contravenes its obligations under international agreements. Many bilateral air service agreements, for example, include provisions that require the timely repatriation of revenues to the home country of the air carrier. Bilateral investment treaties to which Venezuela is a party contain similar obligations.

Currency Controls
Since 2003, Venezuela has operated a currency control system which prevents foreign airlines from repatriating their funds without government approval. By 2013, approvals to repatriate funds from Venezuela were not keeping pace with the amount of funds requiring repatriation and significant airline revenue accumulated in Venezuela. The situation became critical in 2015 when only one request to repatriate funds was approved. There has been only one approval in 2016. Airline funds blocked in Venezuela now total some $3.8 billion.

"With the economic challenges Venezuela is facing, the country needs robust air connectivity more than ever. But carriers have been forced to cut back services in light of blocked-funds issues. That, unfortunately, limits the important role that aviation could play in reviving Venezuela’s economy. We urge the US government to quickly grant airlines immunity to discuss joint action to keep Venezuela connected. That would help the Venezuelan economy and its people," said de Juniac.

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He currently studies Communication, Media & Culture in Panteion University of Political & Social Studies of Athens.