Speech at the 65th IATA Annual General Meeting

By Monday June 8th, 2009 No Comments

ON 8TH JUNE 2009 (MONDAY),10.30 A.M.
KUALA LUMPUR ————————————–


Assalamualaikum Warahmatullahi Wabarakatuh and A very good morning to all.

Y.B Dato Sri Ong Tee Keat,
Minister of Transport Malaysia

Mr. Samer Majali,
Chairman of the IATA Board of Governors

Mr. Giovanni Bisignani,
Director General and CEO of IATA

YBhg Dato’ Sri Idris Jala,
President of the AGM

Distinguished guests, ladies and gentlemen

1. It is a great pleasure for me to join you this morning as you gather here for the 65th Annual General Meeting of the International Air Transport Association (IATA) and the World Air Transport Su’mmit. Let me first and foremost record my highest appreciation to IATA and to Malaysia Airlines as the host of this conference, for inviting me to be a part of this special occasion. I would also like to take this opportunity to sincerely welcome all of you who have travelled from near and far to participate in this important conference, with the hope that while you attend to the serious business at hand, you will also take a moment or two to savour the numerous delights that Kuala Lumpur has to offer. I’m sure you will enjoy the warm Malaysian Hospitality that is not just the proud slogan of our National Carrier, but also the signature quality of Malaysians, known the world over.

Ladies and gentlemen,

2. This conference comes at yet another critical time for the air transport industry, a crossroads, if you will, where the industry must re-define itself and find the best way forward in an era full of challenges and obstacles. Developments in the global air transport industry are of course a matter of great interest to the global community, in good times and bad. With just over 100 years of history, aviation has changed the face of this planet and the livelihood of all who live on it. More than anything else, the acceleration of globalization facilitated by air links has shrunk distances and expanded economic and social ties between nations. On the economic side, aviation’s global economic impact is estimated at USD 3.5 trillion, equivalent to 7.5% of World Gross Domestic Product (GDP) annually.

3. But today the aviation industry finds itself in what is certainly the most challenging period in its history. Never before has the prospect of an industry-wide paralysis been so real. Never before have so many airlines vanished so rapidly in the face of violent financial and economic turbulence. Never before has the need for new thinking and new approaches in the aviation business been so immediate and desperate. In order to survive the fuel price volatility, the global recession and the threat of global outbreaks of disease, the air transport industry together with Governments must work hand in hand to find solutions to map the way forward. Together we must address ways to facilitate trade and revive economies, manage climate change, prepare for the possibility of a pandemic, secure our borders, and liberalize air services arrangements between countries. Together, the industry must continue to provide safe, reliable, secure and economical air services for the benefit of global consumers.

4. The issues confronting the industry are numerous and the possible solutions have been few and far between. Yet every option must be explored, discussed and deliberated, and a new path forward for the industry must be mapped out. One would imagine that the future will see many airlines and aviation players taking advantage of existing synergies, with possible consolidations, mergers and acquisitions taking center stage in place of outdated and indeed largely unfeasible unilateral expansion goals. Of course the business is one that is complex and each player has a different set of objectives and priorities all of which need to be considered in planning for the future. Whatever the case may be, the ultimate aim of the entire industry must be long-term sustainability. The challenges we face today will likely resurface time and again in the future. We must find a way to insulate the industry so that future shocks in the system can be well absorbed without too much impact or damage to the players in the aviation ‘game’.

Ladies and gentlemen,

5. The air transport industry plays a significant role in nation building. Malaysia recognizes that aviation infrastructure is critical to national development and global integration. Malaysia has reaped the benefits from air links that have expanded our export markets globally and generated a boom in our tourism industry. Our world class Kuala Lumpur International Airport currently handles over 50 carriers and received 27.5 million passengers in 2008, connecting Malaysia to the world and driving growth in a large part of our economy. Malaysia Airlines has also been instrumental in nation building and will continue to be an integral part of this process.

6. The national aviation sector has a high multiplier effect of 12.5 times to the overall Malaysian economy in terms of tourism, infrastructure and logistics development. The tourism sector has been especially encouraging, recording 22 million tourist arrivals with total receipts of RM49billion in 2008. Malaysia has also staked a claim in the global Maintenance, Repair & Overhaul (MRO) with, among other things, the transformation of the Subang Airport facility into the Subang International Aviation Park (SIAP) which is a hub housing local and global MRO companies.

7. Clearly the aviation industry is far too important for governments to ignore or let fall by the wayside. The Government of Malaysia is fully supportive of aviation as a key sector of business and commerce. Recognizing the difficulties faced by the airline industry, we are firmly committed to play our part in ensuring not just the survival but the continued strengthening of our aviation industry. Our experience has shown that with sound policies in place, coupled with flexibility and and agility in responding to changing circumstances, the industry can survive and perhaps even thrive in spite of an unforgiving economic climate.
Ladies and gentlemen,

8. A profitable airline industry is critical to any country’s economic prosperity. In this context, Malaysia Airlines as a Government Linked Company (GLC) has thus far delivered on the GLC Transformation Programme and has used this as a framework to spearhead its successful turnaround which focuses on profitability, growth and competitiveness.

9. On a broader level Malaysia has responded to the “mayday” calls from airlines in these tumultuous times. In March, the Government announced a 50% rebate on aircraft landing fees at KLIA as part of the stimulus package. This rebate is for a period of 2 years starting from April 2009 and will benefit the airlines operating into Malaysia to the tune of RM200 million.

10. Malaysia is committed to working with the industry in not only reducing air travel costs but to also improve the efficiency and facilitation of passenger and freight movements at its airports. This commitment is reflected in the close cooperation between Malaysia and IATA in various industry projects. As I understand it, Malaysia Airports and Malaysia Airlines are working closely with other industry players to introduce IATA’s simplifying the Business initiatives at KLIA. I have been further informed that the majority of these initiatives are now either ‘live’ or on trial at KLIA, with the latest being IATA e-freight which was launched in Malaysia in May 2009.

11. I believe that that these initiatives will go a long way in improving the industry in the medium and long term and I am delighted that these and a few more initiatives are being conscientiously implemented. I am also pleased that Malaysia is a pilot country for the secure freight project. The Department of Civil Aviation, MASKargo, Malaysia Airports and IATA are working closely together on this pilot programme, which will reduce the complexities and costs of air cargo security.

12. In an effort to expand the air services arrangements between countries, Malaysia has also adopted liberal air policies. Malaysia is committed to the ASEAN Roadmap for liberalization of air services operated in the region. The ASEAN Roadmap will fully liberalise air services arrangements in the region by 2015. Malaysia is also working closely with other ASEAN member countries to look into the possibility of a Single Aviation Market somewhat along the lines as in the EU. This will probably be some distance away in the future, but it is an exciting possibility none the less.

13. Meanwhile Malaysia is also helping airlines to reduce fuel consumption and carbon emissions through revised air traffic control procedures as well as the implementation of Continuous Descent Approach (CDA) for aircraft landing at KLIA. The trial currently involves Malaysia Airlines, AirAsia and Singapore Airlines and will eventually be expanded to include other carriers. We are also proud that KLIA will be the first stop in Asia to exhibit IATA’s Environment Booth which showcases the industry’s efforts in curbing and reducing carbon emissions.

Ladies and gentlemen,

14. These initiatives I have just mentioned are some of the major things that Malaysia is undertaking in playing its role to strengthen the aviation industry especially for the long term. I am certain that other governments too are looking into every possible measure that would ensure that the industry survives this global economic crisis and gains greater resilience for the future. Beyond the role played by governments, the industry itself must look inward and reflect on the way the industry has evolved and the changes that must take place now in order to prepare for a future fraught with risks and uncertainties.

15. As representatives of the industry your role here at this IATA Annual General Meeting is absolutely critical. You have a full agenda ahead of you and have before you important decisions and deliberations to make. Almost 500 of industry’s top leaders are gathered here to debate the future of the airline industry and how best to work together to revive travel and transform the industry in order to survive these extremely arduous and challenging period. As movers and shakers of the airline and aviation industry the decisions you make at this summit will determine the very future of your industry.

16. I am aware that most airlines have been forced into the red due to the global recession and as a result of huge hedging losses. This is made worse because of the problem of over-capacity. In the highly competitive market, yields tend to drop to the point that many airlines are selling their seats at loss-making fares. Clearly, this is not sustainable and is disconcerting to say the least..

17. However, we draw strength from the fact that the industry has proven its resilience and shown extreme perseverance during earlier crises like 9/11, SARS and previous global economic slowdowns. These have made the industry stronger and more prepared to face current challenges. I am confident that based on these experiences the industry will transform itself once again and emerge stronger.

18. I pray that all of you will have a productive and fruitful meeting and I hope that the decisions taken here at this 65th IATA General Meeting will greatly contribute to a positive transformation of the airline and aviation industry. I wish all delegates and participants every success in your deliberations.

Thank you.

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