New IATA Director General and CEO, Willie Walsh, reveals his plans for the association. Interview by Graham Newton.
Can you give us a personal insight on what the last year has been like for an airline boss?
It has been the most challenging and harrowing time in the business. We always compare a current crisis to historical events but by any measure this is more difficult. International aviation has been shut down for 12 months. It is off the scale.
At first, it was thought that travel into and out of China would be disrupted. That was significant but not insurmountable for most airlines with limited exposure.
By end February, it was clear that there was a global pandemic that would affect all airlines. And in March, travel came to a halt. We had a series of false starts in the northern hemisphere summer but those never lasted long.
I know first-hand the challenges that have faced the industry’s CEOs in this crisis. We had to worry about our people—being ill or being off work to look after friends and families. And it was assumed suppliers would be having the same issues. Every airline CEO is still thinking about what more they can do in this area.
For the business, the focus had to be on the cash position. Often that meant adding to the airline’s debt for the sake of more liquidity. And they will be wondering what model and network will work best in future.
The airlines that have survived have had to reduce cost beyond the mere fact of not flying. And the industry’s debt situation is staggering, beyond $650 billion. It will take a long time to pay that off.
But this industry is resilient. We have seen structural changes before. What we do best is connect people and economies safely. We serve our customers well and what we know for sure is that there is strong pent-up demand for travel. When we can fly, there will be customers to serve. I am optimistic.
Could the industry have been better prepared?
There was not much more the industry could have done. It reacted quickly and the steps it took were the right ones. The fact that we still have airlines is testament to that.
Airlines anticipated extreme stress in their contingency planning, but nobody imagined a complete shutdown. Or that it would take a year before we could even think about flying just 40% of the 2019 network. Yet that seems the best that we can hope for this year. And that was never in any contingency plan.
How will the aviation landscape change?
Government bailouts have been largely in the form of loans so the dynamic of the government relationship with the industry has not fundamentally changed. Everything will still be run on a commercial basis. Success will still be about offering the customer the right service at the right price. Aviation is brutally competitive, and it will remain so.
The best way for governments to get their money back is to let airlines do what they do best, which is to serve customers well. Interfering with that risks an inefficient and ineffective industry.
The landscape will change in that airlines and networks will be smaller. They will be cautious for many years. I don’t think we will see 2019 networks replicated. Many routes will become difficult to justify for individual airlines.
Zoom and Microsoft Teams will have little impact. The technology has been a great enabler, but it won’t replace the desire to meet face-to-face. The more we’ve used Zoom, the more we’ve come to hate it. After a year of online meetings, we have all had that feeling! Technology shouldn’t own us, and nobody will want to sit in front of a laptop all day every day for the rest of their lives. Remote working will doubtless be a feature to a degree but without question we will get back to working in an office and meeting people face-to-face.
More importantly, you can’t hug your friends or family over Zoom.
So, we will get back to normal in a measured, sensible way. That is what everybody wants.
So, is this a good time to be joining IATA?
It is a good time to join. I believe I know what the industry needs and that will help IATA.
I had already decided to retire from the International Airline Group (IAG) when the crisis hit and stayed on an extra six months to see IAG through the worst. I left in September 2020, but I was still worried for the industry and for IATA. IATA only exists because of its members. No members, no IATA. And I desperately want IATA and the industry to succeed.
The industry needs IATA and IATA needs the industry.
What are your immediate priorities?
Opening borders is the immediate, massive challenge. IATA must do everything it can to help the industry restart. IATA Travel Pass is a big part of that. Testing and vaccines look like being part of the travel process for the foreseeable future and that must be digitised.
You simply can’t have people queuing up at a check-in desk or a testing station with a bunch of papers to be read and verified. The processing time would make it impossible for aviation to function.
IATA Travel Pass will enable self-service to continue and that is what travelers want. The App must be comfortable for travelers and authorities alike. That means taking care of privacy and protecting personal data. IATA will supply the infrastructure so that airlines and governments will have the information they need. But the data resides with the passenger and they will be in full control of who it is transmitted to.
Solutions such as this are the perfect vehicle for IATA. Every airline will be required to deal with testing and vaccines, so it makes sense to do it once and make it available to everybody.
How will you work with governments to ensure acceptance of a digitized format?
To move the App from the testing phase to its full potential as a functioning technology requires governments to accept it. Singapore is doing the first full test of capabilities for airline processes. And the government has announced that it will soon start accepting Travel Pass for its requirements. In doing this, I am sure that Singapore will become a benchmark.
Singapore’s Changi Airport is a major hub. But with the country closed to visitors the impact on its economy is huge. The implementation trial there will demonstrate the worth of IATA Travel Pass in helping the country to manage the risks of reopening to the world and restoring its economically vital travel and tourism sector.
The bigger point is that the industry is great at mitigating risk and politicians generally are not so good. Some countries have even adopted zero risk, for example, and that will not work. The Singapore trial will show the way forward in efficiently managing risks.
How else can governments smooth the industry restart?
We need to work with governments in a structured way and show that there are steps available to get international travel going again safely.
Obviously, the vaccine rollout is extremely important. We know that every country will be at different levels. But this is not a competition. This is a global issue, and we need to make vaccines readily available to everybody. That will be the key to getting the most out of international travel. It will take time.
We also know PCR testing is uncomfortable and expensive. There are other testing methodologies available at a lower cost, that are just as reliable, and that are quicker in providing results. We need testing that is safe, reliable, efficient, cheap and secure. That is possible.
Of course, the situation will improve as time goes on. But it is critical to get started now so that we can make the travel process feasible. From check-in to immigration, we need processes that are digital, standardized, and accepted by all.
Other priorities remain important. What more can be done to improve aviation’s environmental credentials?
After the 2008–2009 financial crisis, the environment slowly drifted down the agenda of governments for a few years. But this crisis has perhaps made the environment and sustainability even more important.
The Carbon Offset Reduction Scheme for International Aviation (CORSIA) was a good step, but we need to do more. The Paris Agreement means we must align our goals with the goals of governments. Environmental pressure will continue, and it will be intense.
Lots of airlines are already committed to net zero emissions by 2050, including carriers in oneworld, Airlines for Europe and Airlines for America. Some airlines are moving even faster. But we can’t just say “we’ll do it”. We also have to credibly say how we’ll do it. And offsets are only part of the answer.
Things can move very quickly. Just 15 years ago, talk had just started about sustainable aviation fuels (SAF), electric aircraft, and market measures. The term “sustainable” wasn’t well-defined and included competing with food sources in the production of biofuels. We learned. Now, there is a good platform to build on and technologies are advancing fast. There is plenty of innovation in the pipeline.
The industry can achieve any target it sets. Most often we exceed it. Aviation is the leader in environment responsibility and is putting its money where its mouth is, even in the depth of this crisis airlines increased their purchases of SAF, for example.
Governments can help, especially with SAF. The technology works but it must be commercialized. Right now, SAF costs too much compared with kerosene. But it is possible to scale up SAF production and make it cheaper. The industry doesn’t need government handouts though. We are looking for a partnership that creates a new industry and new jobs. Rather than taxing us for general coffers, governments could use the money it gets from aviation to support the industry’s environmental work.
What other topics will be important in the near term?
All other industry subjects remain important. IATA settlement systems, for example, have been critical. The way they have continued functioning has helped keep the industry afloat.
But we must always look at doing our core activities better. IATA has been constantly reducing settlement costs. And there are plenty of opportunities for further cost reductions across the board.
Cost has always been critical, but it is even more critical now. Even the most efficient airlines are bleeding money because revenue is so limited. So, IATA must likewise look to provide service in the most efficient way. It is not about doing something a certain way because that’s how it’s always been done. IATA should be doing things it can do better than anyone else and that benefit its members.
IATA Travel Pass is a great example of the impact that IATA’s work can have. One of the great things about it is that is more than just a solution. Its development and implementation set a target for other service providers to achieve. It will spark competition and innovation.
How will you make sure IATA stays relevant?
I am here to serve the members and will make myself available to member CEOs at all times. Anything I can do to help, I’d be delighted to do it. I know this industry. I have spent all my working life in it. I know what we need to do to make aviation successful.
IATA represents and serves its members, and it will lead on issues where it needs to lead. The association will be open, transparent, and fully engaged with all members in all regions. And I’ll be pushing to do that even better every day.
Any airline, including low-cost carriers, will join if we are relevant to them. If an airline can function without us, that is not a problem. But if we get it right, we will be relevant and offer members value in excess of cost. IATA has always done that, but that doesn’t mean it will always be the case. So, every day IATA will work on generating value for its members. In good times and bad, that makes the association relevant.