Arab air carriers: “Less Protectionism – More Green Growth”

International Coalition of Tourism Partners (ICTP) President Professor Geoffrey Lipman gave the keynote address last week at the Arab Air Carriers Organization Annual Assembly in Jeddah, Saudi Arabia.

International Coalition of Tourism Partners (ICTP) President Professor Geoffrey Lipman gave the keynote address last week at the Arab Air Carriers Organization Annual Assembly in Jeddah, Saudi Arabia.

This is the second part of his presentation:

Let me talk a little about Green Growth and Travelism, the potential for this to become the new norm and then somewhat sadly, of the SUN program – the Strong Universal Network. Sadly because its inspiration, my friend Maurice Strong, arguably the father of sustainable development passed away just as I set off for Jeddah. Ironically just as delegates were heading to Paris to advance what he started as Secretary General of the 1992 Rio Earth Summit.

The environmental evolution is well known – the impacts of continual global economic growth on basic resources – particularly food and water: the social inclusion gap, the massive reliance on fossil fuels to power our globalizing world: pressures on biodiversity and the final straw existential climate change.

Bottom line – reduce dependence on fossil fuel: usher in an era of renewable energy: positively shift economies to attack poverty and reduce income gaps: practice biodiversity and resource conservation and use the power of the internet and technology innovation to live smartly (and happily if you can emulate the Bhutan model). Do this at a time when the world population is jumping from 7-9 billion, with a growing consumption hungry, middle class and a geo-economic shift to Asia. And do it in a way that keeps temperature growth no more than 2 degrees.

This global debate and related policy framework has been evolving over the past half century – with a series of Declarations and Conventions (like Rio’s Agenda 21, Kyoto and the MDGs).

2015 will see 3 Heads of State Summits that try to reshape our world order onto a Green Growth trajectory. In Addis they agreed the financing rules for a $100 billion a year transfer of funds from rich to poor. In New York they agreed 17 Sustainable Development Goals with 169 targets for 2030 and in Paris they will fix voluntary carbon reduction targets for 2020 with a vision of ratcheting it up then to achieve the magical 2 degrees by 2050.

Airlines are no strangers to this sustainability world. With IATA and ATAG the industry has done a masterful job of maintaining solidarity, establishing principles and priorities, engaging closely with ICAO and broadly positioning to pick up and adopt Paris in 2016. My take is that this will buy another 5 years.

The big challenge will come at two levels

First the greening of the tourism value chain is not so well organized behind the networking events and well written declarations. And much of its focus will be in the hands of others – smart cities: nature based solutions and small island programs for example. And with the SDG’s a plethora of targets and actors will come into play – many of them small businesses …way beyond the tightly controlled system you have been engaged in to date. And solutions will increasingly be determined at the community level – including meeting carbon targets.

Second the more demanding question is longer term. Despite the excellent, ATAG led, emission reduction accomplishments to date, including the huge number of environmental improvements in airline systems and operational processes, as well as the aircraft and ATC technology advances, we will remain increasingly exposed. As one of the only sectors without a currently evident alternative energy capability and with a powerful growth curve, Already the highly regarded New Climate Energy Group, of global environment leaders, has labelled Paris commitments as falling well short of the 2 degree line and singling out aviation and maritime for special attention.

It will get worse.

There are some options – and you have them in your sights – biofuel, permit trading and what Bill Gates calls innovating out of the box. And you are clearly linking more closely with the broader travel value chain to show the “sustainability of the eco-system” that aviation drives – hospitality, infrastructure, retail and the like. I do not think it will go far enough, fast enough. It is complex and growing exponentially at the grass roots community level.

This future will be about actions – not declarations.
At the top level the challenges will be to reach out across traditional silos from aviation and tourism to trade, environment, land use, economy and the like. Fighting on growth, taxes and credits. About getting environmental and travel data aligned – to meet SDG and Climate targets. No benefit mantra, without a real impact assessment. About educating the next generation – in schools, universities and social media. These are the big battles.

But the real green growth delivery of this value chain will be on the ground in communities.

And this is where SUN could play a part – and airlines can be corporate social drivers.

The Strong Universal Network has been designed to help communities move down a Green Growth path, using Travelism (Travel & Tourism) as a vector. SUN will be a system of solar powered research hubs, assembled from containers and linked through the internet cloud.

They will be compact, efficient and low cost. They will house dedicated postgraduate support for communities and their travel stakeholders, to keep their Sustainable Development and Climate Targets on track. I have provided a small brochure – we will announce the first for the National Park in Belgium this week in Paris and look to have 200 in place around the world by 2020.

My last meeting with Maurice Strong was a few weeks ago in Ottawa where we talked about the potential that this kind of community led green growth could have if it were really supported by an engaged Travelism sector. About organizations tracking exponentially growing climate knowledge bases and boosting education. About hotel chains supporting local green cultural programs and green jobs. About airlines promoting and aggregating small business activity into biofuel and carbon credit providers. All focused from a Strong Universal Network. Above all about sending a powerful grassroots message on the leading role that the Travelism sector intends to play in the long term Green Growth transformation I and my colleagues are determined to carry on this vision. I hope there are enthusiasts here. This region has more sun than anywhere on the planet. We would welcome the opportunity to engage with AACO and its members on a SUN program that will contribute to a sustainable future.

Arab Air Carriers: Less protectionism – more green growth

The President of the International Coalition of Tourism Partners, (ICTP) Professor Geoffrey Lipman, gave his keynote presentation at the 50th Assembly of the Arab Air Carriers in Jeddah this week.

The President of the International Coalition of Tourism Partners, (ICTP) Professor Geoffrey Lipman, gave his keynote presentation at the 50th Assembly of the Arab Air Carriers in Jeddah this week.

The topic of his speech was “Less Protectionism – More Green Growth” was a strong defense of airline expansion to drive global economic development, coupled with a vision of what the Travel & Tourism Community needs to do to capitalize on the 3 sustainable development Heads of Summits held this year on Finance, SDGs and Climate.

This is the first part of Mr. Lipman’s presentation.

I want to congratulate AACO – on the immense operational and business gains over the years – an incredible case study of resilience, adaptation and success, in what H.M. King Abdullah of Jordan has called the toughest neighborhood on the planet.

To pay tribute to the Arab Air Carriers for increasingly setting a higher global bar on operations, competitiveness, service standards and branding.

Abdul Wahab, my old friend – surely now the Doyen of Aviation Leaders -you have served this organization and the international community so well with your unstinting commitment to your members and to collaboration itself.

When you invited me here to talk about the future for Arab Airlines things looked somewhat different. Then, it seemed like a good time to draw on some experiences gleaned from half a century in IATA, WTTC and UNWTO on two big issues:

• The stupidity of aviation protectionism

• The realities of a new post 2015 “Green Growth” world.
Sadly, since then security has moved centre stage with horrendous terror attacks in Africa, the Middle East & Europe – with Paris as a flashpoint for global response.

Realistically, this situation will take time to fix and the level of global insecurity will increase significantly. Travel will again sadly be at the epicentre.

However, as you know so well, time gives a clearer perspective – our history shows massive patterns of resilience to these kind of events. Both Airbus and Boeing have stressed in their current long term forecasts the 5% average annual growth for the past 50 years despite periods of rapid traffic dips around major political, military, nature, health and financial crises. And they are forecasting similar patterns for the next 15 years. It is the demographics: the growing middle class and our human penchant for travel. And of course it’s aviation connectivity, new aircraft, new technology, new markets, new airlines and new airports.

So despite the change in context, I will stick to my brief
The current wave of protectionism focused on the Gulf Airlines by some US and European carriers is in my view short sighted, unrealistic and doomed to failure.

It’s short-sighted because these airlines should be looking for alliances and collaboration to better serve the big growth markets of the future in Asia and Africa. And their Union Partners should be thinking of the jobs this would create.

Travellers move around the globe for their own purposes, for the benefits they bring to destinations and for the stimulus they bring to economies – not as the property of airlines. That’s what US deregulation and its international spread was based on. IATA predicts more than 7 billion passengers a a year by 2034 – double what we have today – economies will benefit massively from the value chain contribution.

The main growth will come from emerging markets – predominantly Asia. India, Africa. Arab Airlines will be the logical hub connectors – partly because of your geography and partly because of your competitive leadership, cost discipline and service quality. What Abdul Wahab calls “a high quality value proposition providing customers with a delightful travel experience rather than a mere transport one.”

Your new aircraft – some 2000 on order, over the next 20 years – and inflight excellence will provide the service quality that tomorrow’s passengers will be demanding and that are not a hallmark of US carriers, with their main focus on the massive commoditized domestic market. Airport hubs in this region are leading edge – all have capacity for expansion and design for passenger convenience.

The huge US travel trade knows this and will be your biggest supporters. They want as much airline expansion as possible – any airline – bringing more travel spending into the US market. And the same holds true for the EU travel industry.

It’s unrealistic because it flies in the face of global market evolution.

The base complaint – the competitive playing field is distorted by subsidy due to close economic and structural Gulf States relationships with their airlines & airports is naïve. We live in a diverse world – social, political & economic evolution differs.

Governments and airlines have always had special relationships, whether in ownership, aircraft, fuel or infrastructure support – and these have evolved with politico-economic change. The most evident was British Airways highly visible flagship UK privatization. More subtle was Singapore Airlines long-time first chairman simultaneously holding the post of Head of the Treasury. Air France’s state financing was described as just acting like a normal shareholder, when a similar complaint was voiced during European liberalization in the 90’s. And when we looked at that in the De Kroo “Wisemen’s” group we accepted it as reality.

And another reality is that the US and EU governments also maintains core nationality rules that could be argued are protectionist. For example, majority US citizen ownership preserves access to the huge protected domestic market base. Bankruptcy protection provisions are a form of financial cover of last resort for US airlines. Government travel procurement rules and the civil reserve air fleet program gives exclusive access to government and defence travel business.
It’s doomed to fail because it would mean a reversal in longstanding US Open Market trade strategy generally, aviation specifically and last but not least geopolitical interests.

Open Markets have been rightly championed by the US in trade generally and have increasingly become the gold standard for economic stimulus. Current US trade policy is seeking to enhance its longstanding bilateral market liberalization by regional liberal trading deals – the TPP, NAFTA, US~EU free trade area are all at the cutting edge of US international relations. The EU is looking to do the same.

Aviation as we know, for historical reasons is generally operating separately to trade agreements with 50 years of unique development.

But since US deregulation it has followed a pattern of open skies agreements – the US now has more than 100 around the globe. The US government has taken the view that its airlines are fully able to compete and that its industry, communities and consumers specifically benefit from diverse service options and the broader choice of airlines and routes. The EU has adopted similar strategies over the past 20 years and in fact has become a most active partner in this global liberal market campaign.

As globalization intensifies, parallels and crossovers between trade and aviation become increasingly relevant. It is easy to envision the more liberalizing elements of trade policy extending deeper into the aviation regulatory system. After all aviation is about export and import of goods and services – in other words trade. It is hard to see aviation taking a different tack for protectionist reasons.

Last, there is a direct link between aviation, tourism, trade and geopolitics. As long as the US and Europe need top level peaceful global relations, national interest and realpolitik will take an overriding final role over protecting airlines. It is widely rumoured that the ultimate reason for the EU to back off its ETS drive a couple of years ago was simply the message from China at the top level, that 100 billion dollar airbus order might just be reconsidered. Game set and match: in the global order, it is more sense for the US to maintain a free market aviation drive.

Two takeaways for AACO and members airlines

• An incredible repository of ammunition has been developed in the current skirmish – it will be useful when the next protectionist reaction emerges. As it surely will, as you expand services eastwards and meet inevitable regulatory challenges.

• Gear up for more cross regional action. In the trade arena, regional internal liberalization and region to region, liberal negotiations are intensifying. Aviation will follow this trend with emergence of “regionalaterals” to supplement or even trump the traditional bilateral system.

The International Coalition of Tourism Partners promotes Green Growth and Quality. ICTP is based in Haleiwa, Hawaii, USA, Seychelles, Brussels and Bali with 79 destination members around the world.

More information: www.ictp.travel 

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

Share to...