"Asia is a big part of the aviation world," IATA director-general and CEO Giovanni Bisignani said yesterday. "By 2010, intra-Asia traffic will be the largest market in the world, accounting for one-third of the world's traffic. Critical mass comes with leadership responsibilities."

Speaking at the Asia Pacific Aviation Media Association's Aviation Lecture in Singapore, Bisignani identified three opportunities for Asian leadership in the aviation industry: technology, policy and the environment.

On technology, while labour costs have traditionally been a competitive advantage for Asian carriers, European and North American carriers have reduced their labour costs over the years. Labour now accounts for 27 per cent of costs for European and US carriers, and 15 per cent for Asian carriers.

"As the labour cost gap narrows, technology is the key to competitiveness," said Bisignani.

He highlighted electronic ticketing, which will save the industry US$3 billion (Bt105 billion). While China is at 95 per cent e-ticketing penetration, well above the global average of 78 per cent, the rest of Asia is only 3 per cent ahead of Africa at 68 per cent due to the slow uptake in Japan and Malaysia.

"We will make our 100-per-cent target by the end of this year, but it will require a major effort by some carriers to catch up," said Bisignani.

He also suggested better use of technology to simplify passenger travel and improve air traffic management. While some Asian countries are already using biometrics for immigration processing, these programmes are targeted at local residents and are not linked systematically.

"Effective systems are needed to handle the additional 250 million passengers passing through Asian airports in 2010. Asian governments have an opportunity to link their systems to make Asia a world model for a new way of travel," he said.

He also urged Asia to lead air traffic management by implementing cost-effective technologies in line with global standards. Focusing more on aircraft capabilities, they can reduce the need for expensive and labour-intensive ground-based facilities, while improving safety and efficiency, thus increasing airspace capacity.

"Governments are responsible for safety. However, not all governments in Asia are at the same level in safety oversight. Global standards need to be maintained by all. Asia's governments need to start incorporating the IATA Operational Safety Audit (IOSA) into their safety oversight programmes in order to drive the accident rate down," he said.

The 2006 accident rate for Asia-Pacific carriers was on a par with the global average of one accident for every 1.5 million flights. But the industry target is a 25-per-cent improvement by 2008.

As to policy, airlines need commercial freedom to operate as true businesses. "The future is yours to shape," said Bisignani.

"Don't repeat the short-sighted mistakes of Europe and the US. While the recent US and Europe open-skies agreement was a step in the right direction, it fell short of the fundamental change that the industry needs. ... It's Asia's turn. But you must think bigger and faster to implement a staged approach to liberalisation that can keep pace with the needs of a dynamic industry."

As regards the environment, the average age of the Asian aircraft fleet is 10 years compared to the global average of 12, making Asia's aircraft more fuel-efficient and environmentally friendly.

"The challenge for Asia is to avoid the crisis in Europe and communicate more effectively on the environment, and to continue to invest in fuel-efficient technology as the industry grows. Asia also needs to join the rest of their industry partners in pushing governments for more efficient infrastructure, manufacturers for more efficient equipment, and oil suppliers for research into alternative fuels," said Bisignani. "Asia's growing importance is clearly defining a new leadership role in all aspects of the industry. Asia must develop a leadership framework to drive a common regional approach with innovation on all fronts: from the technical issues to fundamental policies. Aviation is the world's most exciting industry and Asia is the region that is going to drive it forward."

He also announced a revised industry profit forecast of $3.8 billion for this year. This comprises: North America down $600 million, Europe up $2.4 billion, and Asia-Pacific up $1.7 billion.

The Nation

SINGAPORE