Articles & speeches

Straighten Up and Fly Right: Life in the Corporate Cockpit
Address to the Royal Aeronautical Society
Montreal, November 28, 2006
(Page 2 of 2)

Security is hardly the only source of passenger anxiety and management stress.

The endless quest for increased safety is the number one challenge of airline management.

Safety is the area where a zero defect mentality really belongs.

The year 2004 was the safest year ever for air transport – but last year’s eight crashes doubled the number of accidents with passenger fatalities.

The European Union suggests that airlines with unsatisfactory safety records should be blacklisted on the Internet. Interestingly enough, none of the airlines involved in accidents last year had been blacklisted.

But I believe that a more fruitful measure would be much tougher and more frequent independent safety audits conducted by ICAO or IATA.

For instance insisting that airlines submit to an Operational Safety Audit Program (IOSA), a program I launched when I was head of IATA. This year I believe more than 100 airlines will be audited under the program.

Sound management practice calls for outside financial auditors to review a company’s books at least annually. Surely safety is as important a subject for audit as an airline’s financial accounts.

The manufacturers are doing their part by developing better instruments and systems to make the skies safer.

One example is the avionics developed by Thales for the A380 flight deck.

An integrated surveillance package includes new digital radar that makes it easier to avoid thunderstorms. The next upgrade will be a “synthetic vision display” that will finally deliver what Charles Lindbergh always wanted: “A pair of spectacles to see through the fog”.

Other developments aimed at reducing airways congestion will also have a salubrious effect on safety.

The “Single European Sky” (SES) concept has been accepted in principle, and streamlined air traffic control rules are being pushed through.

Unfortunately, the European Continent’s 34 separate air navigation agencies won’t disappear anytime soon.

Abolishing borders in the sky is a political minefield. In an attitude that goes back to World War II, many in the EU are still uneasy about allowing “foreigners” to regulate and oversee their airspace.

Galileo, the proposed European SatNav system, should be operational by 2008 now that the sharing of remaining development costs has been decided. Thales is part of the development consortium.

I believe these new instruments and systems will help, and I applaud ICAO’s recent initiative in seeking consensus on a global strategy for aviation safety.

But ultimately, the buck for safety stops at the desk of the airline’s chief executive officer.

Airlines are the most visible manifestation of air safety, and must accept that reality – even though much also depends on governments, manufacturers, etc.

Airlines have to be upfront, leading the change for improved safety.

How? By their CEOs showing evidence of real, and continuous, concern for safety.

Safety has to be an essential part of an airline’s culture – and the CEO incarnates that culture.

The CEO must be the “Chief Safety Officer”, responsible for safety throughout the organization, ensuring the right checks and balances exist, getting reassurances of the right competency levels.

The CEO must be the airline’s guarantor of safety.

Liberalization of the industry can never imply a liberalization of standards where maintenance procedures, flight crew professionalism and all other aspects of safety are concerned.

As the industry deregulates and expands, government agencies must be increasingly vigilant in ensuring that all carriers and other aviation stakeholders follow the highest possible standards.

Whereas regulation may still be insufficient in areas like safety, it remains excessive where markets are concerned.

Market liberalization is progressing – but still too slowly.

I was pleased to see the Canadian Government “Blue Sky” initiative announced yesterday, and I would urge their prompt action.

It’s disappointing to hear some industry leaders continue to urge extreme caution on liberalization.

But the notion of government protecting its flag carrier still persists.

Current US liberalization policy is also disappointing. I remember when the United States championed deregulation, the rest of the industry had to be dragged kicking and screaming into a new world of unfettered market expansion.

It’s somewhat ironic that after successfully negotiation 70 open skies agreements with every nation it could bring to the table, our neighbours are now reluctant to proceed with an open skies agreement with the European Union.

Apart from concerns about security, foreign ownership and cabotage, the United States might be less reluctant to take this next step if its legacy carriers were stronger.

Downsizing and consolidation into three or four lean and mean competitors would make a big difference at the negotiating table.

Unfortunately, in my view, Chapter 11 had prevented the required consolidation of legacy carriers.

When Pan Am and Eastern were allowed to disintegrate, other airlines picked up the pieces worth saving – such as part of their fleets, gates at congested airports and a number of international route rights.

The United States is a huge mature air market. It should let the industry shake itself out.

As a significant stepping stone to a fully integrated common air market over the Atlantic between Europe and North America, the European Union might be interested in a discussion with Canada along the lines of its proposal to the Americans.

Canada has stated on several occasions that on a reciprocal basis, foreign ownership of Canadian carriers could readily be increased to 49 percent.

The advantages to Canada are obvious. Our airlines would have open skies access to a market of some 450 million people – some fifteen times our population.

Like-minded countries in other regions of the world are opening and integrating their market in this fashion.

For example, Russia and China appear interested in an open-skies style agreement with the European Union.

So are countries bordering the Mediterranean.

And a recent accord between four members of the China-Pacific Economic Cooperation (APEC) may well serve as a blueprint for other regions to establish similar open-skies frameworks along regional lines.

India has been making significant moves towards complete market freedom, and intends to pursue liberal agreements with all its neighbouring countries.

I am pleased to say that I had the privilege to have been consulted – and to make a small contribution – to India’s new liberalized aviation policy.

I know – and most airline managers now agree – that a “big bang” solution to worldwide liberalization is most unlikely.

But we must continue to make progress in a three-fold approach:

Continued expansion of bilateral “open skies” agreements by all like-minded nations;
Continued expansion of regional common air markets, such as achieved by the European Community; and
Pursuit of bilateral agreements between regional common air market areas and other regional areas – or by “block-lateralism” to use an expression I coined some time ago.

It’s a curious paradox that the globalization of industry, trade and commerce has been largely driven by airlines – but they remain still very regulated themselves.

Why is it that in the automotive industry, the pharmaceutical industry, chemical industry or the petroleum industry, anybody can do anything on a worldwide basis – but airlines still cannot?

Bismark said that “the strongest nations are always in favour of free trade.”

And if a nation’s trade is threatened, it can always legislate its way out of any multi-lateral agreement, as the current Canadian government wants to do with respect to the Kyoto accord.

Bismark also said that “the most useful thing about a principle, is that it can always be sacrificed to expediency.”

Aviation contributes only about 3% of the world annual addition to greenhouse gases.

Nevertheless, the air transport industry is blamed by environmentalists for a far greater portion of the damage caused by air pollution.

But insisting that we are an insignificant part of the problem is not a solution for airline management. If nothing else, the high profile of our industry demands that airline management be actively involved in the challenge of protecting the natural environment.

Noise used to be the biggest challenge, especially in communities that sprung up around airports because the land was cheap.

New aircraft are 75% less noisy than the previous generation, and exceed the latest ICAO standards.

Although the debate over noise has grown much quieter, the debate over fossil fuel consumption has been getting louder all the time.

The search for non-carbon sources of future energy to replace, supplement and complement today’s traditional carbon-based fuels must go on – and with vengeance.

The airline industry likes to argue that it cannot do much more than constantly improve engine technology and operating procedures – that there is no economical and safe alternative to jet fuel.

Richard Branson of Virgin Airways begs to differ. He announced recently that he intends to build plants to produce an environmentally-friendly aviation fuel – from cellulosic ethanol.

Whether or not Sir Richard’s good intention proves viable, I believe that developing bio-fuels for aviation, as we have started to do for automobiles, is well worth exploring.

It is very unlikely that our industry will be able to reduce the emissions rate from conventional fuels as fast as the growth in air travel.

New generation airplanes – the B787, A350 and A380 – with their 20 percent improvement in fuel consumption and corresponding reduction in emissions, represent a monumental achievement likely to be difficult to repeat in the next generation of airframes and power plants.

Rolls-Royce’s planning for future engines, their “Vision 10” research program which covers technologies likely to become available within the next decade, targets about a 10 percent further improvement in specific fuel consumption.

Punitive taxes on air travel are not the answer.

Taxes aimed at reducing demand, and at pricing people out of air travel, and which disappear into a general fund, simply destroy aviation’s economics and its associated social benefits – with no appreciable gain for the environment.

In fact, they limit the industry’s ability to invest in new technologies that could further reduce its impact on the environment.

A better short-term incentive is emissions trading. Allowing airlines to buy and sell the right to emit CO2 would be a more efficient way to tackle climate change.

It is a pity that the current Federal Government’s position on Kyoto has seriously limited Canadian firms from participating in a new and important business sector.

The longer term proper solution is to get rid of CO2.

If our ability to further improve engine efficiency, to switch to less damaging fuels, to become “carbon neutral” is limited, then we must be part of the overall solution by pushing for a massive effort to decarbonise the world by storing – or destroying – CO2.

Pollutants come from many sources, but the bulk of them – some seven billion tons of carbon a year – come from smokestack industries.

Much of the technology to build plants without smokestacks, to capture, store or destroy CO2 rather than vent it into the atmosphere, already exists.

It can be done – if the political will is there to do it. It’s very much a manageable problem.

We decided to send a man to the moon before we even knew it was technologically possible.

Dare I suggest that we use “eco taxes” on fossil fuels to return carbon to the ground, and by planting trees and reclaiming deserts?
And if a nation’s trade is threatened, it can always legislate its way out of any multi-lateral agreement, as the current Canadian government wants to do with respect to the Kyoto accord.