Keynote address to the APG World Connect Conference

Commercial Aviation: Challenges and Opportunities
Keynote address to the World Connect APG Conference
Monte Carlo, November 4, 2010  >>


Ladies and Gentlemen:

It is a real pleasure to be participating in this World Connect APG Conference.

I understand this is only the second edition of this type of conference, dedicated largely to the commercial side of our aviation industry – marketing, sales, distribution and the like.

I have known Jean-Louis Baroux for a long time, perhaps longer than I care to remember. As many of you know, Jean-Louis is known for staging excellent Conferences which achieve an appropriate blend of food for thought – and food for the palate.

Mindful of his modest ambitions, I suspect that this event will soon be known as “the Commercial Aviation Monte Carlo World Summit”.


The airline industry is a tough business – always has been and I guess always will be!

I can make that statement with a fair degree of confidence, having lived through during my aviation career at least four major economic downturns.

And I have the scars to prove it!

Which goes to show that I have been in aviation a long time.

In fact when I started, flying was still a little dangerous – but occasional sex was still quite safe!

I know of few other industries that are as capital intensive as aviation, with the need to commit large investments on a long lead time basis, and at the same time as dependent for its revenue on short term variations of the economy and the resulting wide fluctuations in discretionary income.

And this is where we are called upon to use our skills and ingenuity to compensate for the high degree of short-term unpredictability of the demand.


Now as we stand back looking at our industry, it should be obvious that
beyond the consequences of being buffeted by short-term economic fluctuations, this industry is in the midst of a highly significant transformation which is essentially introducing a new era in commercial aviation.

A number of important events and forces have combined, among others, to accelerate that transformation. More specifically:

Some spectacular attacks by kamikaze terrorists – and that threat will continue;

A sudden and highly disruptive oil crisis which could easily recur;

The continued pressure on yield to meet consumer demand;

The progress achieved thus far – and the worldwide trend – in further liberalizing air markets;

A deep economic recession which lingers on, particularly in the U.S.A. and Europe

The rapid economic growth of Asia, more particularly the economies of India and China;

World-wide recognition of our contribution to climate change, and the need for aviation to reduce its carbon foot-print.

All of these factors – and more – are irrevocably changing and redefining commercial aviation and will present us with challenges – but also opportunities.


On the matter of the environment, the industry has set as a target to cap net carbon emissions and achieve neutral growth from 2020 onward.

Since we continue to project that traffic will double over the next fifteen years, it would mean that, by then, our current CO2 emission per passenger/kilometer would have been reduced by 50%!

This is a very ambitious target which requires, among other things, that we accelerate the development – and mass production – of new fuels.

There is a definite marketing advantage to being perceived as “being green”!

Airlines and aircraft manufacturers are heavily involved in testing various fuel alternatives.

Several airlines have successfully operated flights with a 50% blend of biofuel and conventional aviation fuel – and advertised the results to gain some marketing advantage.

A recent study endorsed by Boeing concluded that the fuel blend met, or exceeded, all parameters required such as fuel freezing and flashpoint with no adverse effect on engine or components.

And thus it appears that the mix is also quite safe.


Naturally, airlines also expect that the new aircraft models will play an important part in the achievement of the carbon emission reduction targets.

The airline industry has been asking for new airframe and powerplant combinations capable of delivering fuel burn improvements in excess of 20%.

The significant increase in the use of composite material, improved aerodynamics, and more efficient engines are likely to help us meet that level of improved performance over the next 15 to 20 years, as the entire fleet is renewed.

Unfortunately, launch and production delays have significantly hampered wide-body fleet renewal.

The Airbus A-380 has met – or exceeded – its expected performance, but the manufacturer has been struggling to ramp up production.

Last year, only ten Airbus A-380 were produced, and the hope is that the rate can be increased to 20 for this year (more than 230 have been sold).

Extensive delays and additional cost have also plagued the introduction of the new Boeing B-787, the so called “Dreamliner”.

This airplane was to begin commercial operations two years ago this Fall. It has now been announced that the first delivery to All Nippon, its launch customer, will slip into 2011.

At this time, there is no reason to believe that this new family of airplanes will not fully meet expectations and offer savings of the order of 20% or better in operating costs … and fuel consumption.

The standard version – the B-787-8 – with a seating capacity of 210 to 250, is expected to replace the Boeing B-767-300ER and the Airbus A-310.

The longer range and higher capacity version – able to accommodate from 250 to 290 seats – will enable many new route to be opened where today the market is too thin to be economically served by a Boeing B-777-300ER or an Airbus A-340-500/600.

Not to be outdone, Airbus has been developing a new long-range wide-body – the A-350 series – which once again promises to improve significantly on its current A-330, A-340s and some Boeing B-777 models.

The A-350-1000 – its larger, long range version – hopes to render obsolete some Boeing B-777 models.

The Airbus A-350-800 would be aimed at competing advantageously with the bigger version of the “Dreamliner”, more specifically the B-787-9.

And thus, the profile of the wide-body, long range international fleet likely to be in service over the next twenty years or so is already well known.

The airframe will be largely made of composite material, the aerodynamics will have been further refined, the engines will provide substantial improvements in fuel burn, and safety and dispatch performance will be higher – resulting in further improvements in reliability and maintenance costs.

And as Emirates has demonstrated, the introduction of a new, modern, cost effective, energy efficient aircraft types – such as the A.380 – can be an important marketing tool!


But what about the single-aisle, narrow-body fleet?

The two major aircraft manufacturers – Airbus and Boeing – are unlikely to launch into the design and development of a totally new, narrow-body aircraft any time soon.

The primary reason is that they both need to complete their respective wide-body programs – and reap some of the resulting financial benefits – prior to committing to some other very costly development.

Both lines – the A-320s and the B737NextGen – continue to sell very well, and the only concern on the horizon would be whether the Bombardier “C” Series is likely to gain momentum and carve up a significant share of the bottom end of the two well-established single-aisle families.

Still another important question is whether both major manufacturers are satisfied with the engines which could be made available for a new narrow-body aircraft.

Wisely, Bombardier delayed its launch decision until it was assured that Pratt and Whitney could guarantee the availability of a new engine.

The Pratt and Whitney 1000G Geared-Turbo-Fan, which claims to deliver 12 to 15 percent lower fuel burn, was simply crucial to the “C” Series promise of 20 percent improvement over existing A-320 and B-737 NextGen current models.

Now CFM International has also proposed to enter the narrow-body engine market of the future, which could deliver 12-15% percent better fuel burn.

Airbus and Boeing have been seriously examining what they would need to do to put new engines on an upgraded version of their aircraft, raising the prospect of a modernized, re-engined A-320 and B-737 family emerging some five years from now.

The decision by the major manufacturers to offer a re-engined A-320 and B-737 five years from now could impact the market share that the “C” Series of Bombardier is hoping to capture.

The market share of the “C” Series will be very much affected by the timing of the re-engining decision, the price of fuel and whether, following re-engining, the “C” Series would still benefit from a 10 percent or so fuel burn advantage.

As of this moment, Embraer does not seem anxious to enter the fray and appears content to compete in the 100-seat or less market.


Worldwide deregulation of air markets has progressed rather slowly, but steadily.

In contrast to some other industries, there was no “big bang”.

A number of regionally integrated air markets exist today in Europe (E.C.), North America, Latin America, Africa, and Asia.

Internationally, the U.S.A. “Open Sky” initiative introduced an air bilateral agreement which removed any constraints as to pricing, capacity, or points served between the U.S.A. and other countries.

This type of highly liberalized air bilateral agreement has progressively become the norm in most of the air bilaterals being negotiated today.

The globalization of trade and the liberalization of the air markets is typical of the powerful forces at work re-shaping the profile of the aviation industry.


To take advantage of liberalized air markets, new business models have emerged – and previous business models have had to question their relevance and redefine their roles.

One thing is quite clear: the days of government-owned national airlines are over.

The constraints of government ownership – and the inefficiencies that came with it -render such an organization incapable of coping successfully with the intensely competitive environment which today characterizes our industry.

One of the significant factors that has forced the re-structuring of the traditional network carriers has been the emergence – and the surprising strength – of the so-called “low cost” carriers.

During the aftermath of the U.S. deregulation, many new carriers came into being, attempting to follow the Southwest model.

Most were unable to survive past the 1990 economic recession.

It was up to Europe to re-launch the concept New carriers such as EasyJet, Ryanair and others gave the low cost model new impetus.

Today, low cost carriers have established a presence in every region of the globe, exerting strong competitive pressure on the more traditional airlines.

Those have been compelled to redefine their presence in the market and to adjust their domestic and regional networks.

The growth of the “low cost” carriers has been nothing short of remarkable.

A study published earlier this year by the Centre of Asia-Pacific Aviation indicates that the total growth of the world capacity deployed since 2001 is equal to the growth experienced by the “low costs”.

The number of seats flown by the “low costs” grew from 7 percent to 22 percent of the total!

Not every new entrant has been successful but still, by the end of last year, approximately two thirds of all newcomers since 2000 had survived.

Which means that adding up the players present in all the regions of the world, some 128 “low costs” were in operation.

What makes the “lowest price” marketing strategy of the “low costs” so successful is, of course, the simplicity of its business model.

It is a no-frills service – a single class, one type of aircraft only, with high-density seating and high aircraft daily hour utilization.

A low cost generally has low overhead, few fixed costs, extensively out-sources, employs younger, lower-paid employees – and distributes its products almost exclusively through electronic media.


Responding to these competitive forces -and to take advantage of the new flexibilities offered by the more recent, regional economic integrations – several traditional airlines have decided to re-group through mergers and acquisitions, and develop alliances.

This marketing strategy is centered on offering the convenience of a worldwide network.

The re-grouping is well underway in Europe.

Lufthansa – which earlier absorbed Swiss International, the former Swissair – has more recently completed the acquisition of Austrian Airlines, British Midland, and Brussels Airlines, a quasi low cost which was created following the demise of Sabena.

Air France and KLM were first in Europe in successfully completing their merger. The model they developed has in some ways set the pattern for others to follow.

The Air France/KLM Group has also recently acquired an important participation in Alitalia, which commits the Italian national carrier to become part of their group eventually.

The third European group – comprised of British Airways and Iberia – is now completing its much delayed merger.

Of course, there are many other national airlines that have so far remained independent, but it will be increasingly difficult for all of them not to join one or other of the groups or to participate in some form of merger or, at the very least, some association.

In North America a similar phenomenon is present, and we have recently witnessed the merger of Northwest and Delta Airlines.

United Airlines is completing a merger with Continental Airlines.

And thus, we have three major regroupings of traditional airlines emerging in the U.S. – each aligned with one of the three major European groupings.

Joint ventures across the Atlantic have already been in the making, with the Air France/KLM Group and the Delta/Northwest group concluding a commercial agreement which brings under one umbrella all their respective trans-Atlantic services.

The same approach has been developed by Lufthansa, United/Continental, and Air Canada – and American Airlines and British Airways have also concluded a similar agreement.

All these activities clearly point to setting the stage for a “mega merger” of airline groups on both sides of the Atlantic should that ever be permitted under the U.S./European Community bilateral agreements.

The process of regrouping airlines is going on, as well, in other regions of the world, in particular in Latin America with the activities initially led by the Lan Airlines and TACA, the Central American Airline.

As a case in point, Brazil’s TAM in August of this year announced plans to merge with the LAN Airline Group – which would create the largest airline in Latin America.

Consolidation is also very much contemplated by the low cost airlines … as illustrated by the recent acquisition of AIRTRAN by Southwest Airlines.


It is most interesting that despite the difficulties experienced by national carriers to survive under the pressure of the low costs, new airlines – which could be called “national airlines” – have emerged and are rapidly establishing a position in the international market.

Over the last decade, some small States in the Persian Gulf have developed ambitious new hubs and are actively engaged in expanding their operation into the sixth freedom market which exists between their tiny States on the one hand – and Asia, Europe, and America on the other.

In the Gulf, Emirates based in Dubai, Etihad operating from Abu Dhabi, and Qatar Airways whose operation is in Doha have all ordered large fleets of aircraft.

To illustrate their ambitions, Emirates has put in an order for 90 Airbus A-380s and 70 Airbus A-350s.

In the case of Qatar Airways, they have recently put in an order for 80 Airbus A-350s and five A-380s.

It remains to be seen if, in the present context, these three new airlines based in the Gulf will actually be able to grow and prosper.

The Asian market is growing very rapidly – and this is particularly true for the Indian Sub-Continent and China.

In both of these large regions, well-established champions such as Cathay Pacific, and new rapidly growing international airlines such as Jet Airways of India, are unlikely to stand idle and allow the Gulf carriers to take away their markets.

The availability of new airplanes with long-range capabilities allowing flights to operate directly between Asia, Europe, and North America, for instance, using Boeing B787s and Airbus A-350s, will easily enable any Persian Gulf hub to be bypassed.

This situation suggests that price competition involving those very important Asian markets will likely be very active in the next timeframe.


The recession in Asia has been short-lived and the growth of air traffic is once again nearing double digits.

The Asia-Pacific region has just recently surpassed North America in terms of annual passengers boarded, more specifically, 647 million passengers vs. 638 million passengers in 2009. It is forecast that in a few years from now, the Asia/Pacific region will represent 50 percent of total air traffic worldwide.

The other regions that are also enjoying excellent air traffic growth are South America – particularly Brazil – and of course, the republics that were previously part of the Soviet Union.

And we should not forget about Turkey which, with its large population, is also growing very rapidly.


Lastly, it is worth mentioning another small but growing business model used in addressing the needs of an important segment of air travel demand.

Until the last economic recession, the number of private and corporate jets was increasing rapidly.

Tongue-in-cheek, one might be tempted to say that the increase over the past few years in executive remuneration was driving this expansion!

You may remember images of the U.S. automotive industry’s top brass flying to Washington in their private jets to beg for tens of billions of bailout money to save their respective companies.

The utilization of private airplanes has been made increasingly affordable by various formulae such as “fractional ownership”, or simply by contracting over a period of time with a supplier willing to guarantee aircraft availability, when required.

Additionally, there is no doubt that the security-related hassle – and confusion – at most airports has contributed to the popularity of private and semi-private aircraft which enable the user to largely by-pass this frustrating experience.

Although the economic crisis has dampened this expansion, we should fully expect that this sector will soon recover with vigorous growth.


The most recent forecast published by Airbus Industries predicts that by the year 2028, air traffic demand will have nearly tripled – and that the fleet of passenger aircraft with over 100 seats will have grown from some 14 thousand in 2009 to over 28 thousand … by 2028.

To accommodate this projected growth, congestion of the various infrastructures would be a major issue if not vigorously addressed.

The characteristics of the airports at which you operate can be both a challenge – and a marketing opportunity to exploit.

This has been well understood by the Gulf States, which are planning the expansion of their hub airports to support the growth of their airlines.

One factor helping to fuel airport congestion is the growth of the world’s major cities, coupled with the fact that more people are becoming economically mobile.

This was a major factor in the decision by Airbus to build the A-380.

This “very large airplane” substantially increases the number of passengers which can be carried on any one flight between the mega urban centers.

Equally valid was the strategy developed by Boeing in proposing the B-787-9 – its long range version – aimed at opening new city-pairs and creating many new mid-size hubs.

The other important infrastructure which can significantly affect the quality of our product is air traffic capacity.

Fortunately, the need to modernize both the European and the American air traffic control systems was finally recognized.

The SESAR project proposes to unify Europe’s ATM Systems, create capacity to handle a threefold increase in flight movements, improve safety by a factor of 10, and reduce by 10 percent the environmental impact per flight.

SESAR components and procedures will be progressively implemented from 2010 to 2020.

The U.S.A. Next Generation Air Traffic Management System – NextGen – has been under development for some time and will require some 20 billion US dollars up to 2025 to complete its development.

This new system will introduce cutting edge, satellite-based navigation technologies with more precise flight tracking, provide a single Information Management System, improved data links, and a single weather information system.

The objectives for NextGen are similar to those of SESAR.


Ladies and gentlemen, how do we see the commercial challenges and opportunities for aviation – given the forces at work reshaping the industry?

I believe that we can make the following observations and comments:

First, the good news: we can expect significant market growth:

The desire to travel and see the world – and the need to travel for business reasons – will continue to grow worldwide, which means that.

The industry forecast – calling for traffic to double every fifteen years – is likely to prove correct. I would expect that the industry will carry approximately five billion passengers in 2025.

Much of that growth will come from Asia-Pacific, with China and India providing the lion’s share, and with the other emerging economies likely to be important contributors to that growth.

And, our industry will be much greener:

The combination of new aircraft types with lower fuel burn and maintenance costs as well as improved air traffic control should eventually provide airlines with a 20-25% reduction in operating costs.

The production of biofuels will eventually meet some 50% of the air industry’s requirements.

We will need to continue to adapt our business models:

Europe and North America will continue to move towards a more fully integrated air market

In most regions of the world, low cost airlines will continue this move towards a 50 percent share of the regional/domestic market.

With low cost airlines’ greater maturity and diversity – and legacy carriers’ improved cost discipline – the two business models will increasingly converge.

On the subject of infrastructure:

It is likely that airport capacity will vary considerably from one region to another.

This will always be an important commercial challenge to mitigate – or an opportunity to exploit.

However, I believe that significant improvement in air traffic control capacity resulting from the implementation of the various components of SESAR (Europe) and NextGen (USA) will be achieved.

And finally:

The combination of the electronic networks and sophisticated biometrics will increasingly give air travelers a great deal of control in handling their travel needs, as well as checking and boarding, and including baggage handling at the airport.

While this increases passenger convenience, it also improves airline productivity and costs.


And thus we may have good reason to feel optimistic about the future of our industry. But it is equally obvious that there is no shortage of challenges.

The industry may be recovering from the last economic crisis – but its financial situation remains somewhat fragile.

Our past experience has shown that we continue to fail to learn how to manage through every economic crisis, and unless we do better, the financial situation of the airline industry will not improve.

The drive to increase market share continues to fuel the tendency for the whole industry to provide far too much capacity.

Which brings much pressure to bear on the commercial people who are expected to react on short notice and fill that capacity – without any significant deterioration of the yield!

How does anyone develop a sensible long-term commercial strategy, when the pressure to meet next month’s revenue targets and bottom line objectives can become all-consuming?

As the saying goes …:

“When you got many alligators biting at your ass, it’s hard to remember that you came in to clean the swamp.”

Thus, it seems to me that in the foreseeable future, the battles for the customer will be as fierce as ever.

There is no room for complacency. Keeping ahead of the game will continue to require much ingenuity.

Every sale is important and can count – as long as it generates an incremental contribution to the bottom line.

And of course, we should always remember that we are fundamentally a service industry, and that the human dimension is an important – indeed a central element – of the service we provide.

Understanding your customer is fundamental, and having first hand knowledge – and relations – is invaluable.

The founders of the Ritz Hotel used to say:

“A complaint is an opportunity with a client.”

However, with passengers fully able to handle their own reservations, checking, boarding etc., we may be losing a very important personal contact.

Some airlines are compensating to some extent for this lack of personal contact by making extensive use of web-based social networks.

They are increasingly using “Twitter-like” networks to listen to what their customers have to say – and are also finding this social network to be a good way to promote their fare sales.

Versions of Facebook are likely to be used extensively to keep a personal contact with the traveler, and allow a platform for discussion.

Facebook is now reported to be the most used website by in-flight WiFi users.

Some airlines are also busy developing a variety of i-phone applications to deal directly with their clients.

Unlocking the full power of social media for travel application and services is the latest way of keeping in touch with the customer.

All of which simply adds one more important dimension contributing to the never-ending transformation of our aviation industry – and continuing to make it an exciting world in which to be involved.

Thank you!

Address to the Canadian Aviation Historical Society

The History of Tomorrow Being Made Today
Address to the Canadian Aviation Historical Society
Ste-Anne-de-Bellevue, Canada, June 4, 2010  >>


Mr. President, members of the Canadian Aviation Historical Society, ladies and gentlemen of the aviation community.

I am most honored and very pleased to be associated with this historic event.

An event which celebrates the one hundredth anniversary of this region’s passionate love affair with the world of aviation.

I believe that the genesis of this great interest can be traced back to the first Canadian International Aviation Meeting which was held here in June 1910.

At the closing event, Count Jacques de Lesseps flew his Blériot XI over the city of Montréal – and it is said that this first ever appearance of an aircraft in the Montreal skies generated a considerable amount of emotion and interest.

This was undoubtedly a defining moment in time which has led to the diversity – and the richness – of the aerospace activities that this region is known for today.

And I know that you are very much aware that the greater Montreal region is the home of some 60% of the entire Canadian aerospace industry – and is considered one of the three world centers of this important industrial sector.


I am reminded that Prime Minister McKenzie King once said that the problem with this country was that

“Canada has too much geography … and not enough history”.

But when it comes to aviation, Canada has an impressive history. And in deference to McKenzie King, it would be fair to say that it is the challenges offered by Canada’s geography that has led to the writing of some of the best chapters of Canada’s – and indeed the world’s – aviation history.

As Canadian aviation enters its second century, I can attest that I have been a part of it, in one way or another, for more than half of that period.

In fact when I started in this industry, flying was still a little risky – but I am told that in those days sex was a lot safer!

When I joined Trans-Canada airlines, the Canadair North Stars were the mainstay of the fleet and Lockheed Super-Constellations were opening up more Atlantic routes.

The airline was fulfilling its nation-building role, having taken over from the railroads the task of bringing this country together.

The pioneering efforts of my predecessors have been, I believe, well documented.

They have inspired many of us – and have substantially; contributed to the advancement of aviation worldwide.

As for my modest contribution to aviation history, I believe that the part I played in the development of the famous “Black Box” has been mentioned many times.

What is perhaps lesser known is that I was the first Air Canada executive to integrate and lead all computer systems and communication functions.

Today, you would call this role the Chief Information Officer – the C.I.O.

In that capacity I directed the development and implementation of the first real-time computer reservation system in the world – Reservec II.

For the sake of full disclosure I would need to point out that American Airlines was also developing a real-time computer system in the same timeframe.

There were, however, some significant differences between the two systems, as ours was based on Univac computers and theirs on IBM.


Now let me say, for the record, that during my stewardship of Air Canada which covered the best part of the 80’s (I left the airline in the fall of 1990):

We designed and introduced the first Business Class over the Atlantic and long-haul transcontinental routes

We regrouped, or created, regional airlines in every major part of Canada which today are the founding components of Jazz.

We pioneered the wide-body twin engine aircraft over the Atlantic.

We designed an ambitious international strategy which permitted Air Canada to finally gain access to Asia.

Transforming the then Crown corporation into an airline that could be privatized was, without a doubt, the most significant challenge that I faced as the CEO.

Every facet of the business needed to be addressed:

  • The network needed to be streamlined
  • The fleet modernized
  • Our productivity substantially improved
  • Our balance sheet significantly strengthened
  • Out internal culture completely changed
  • All contracts to be re-negotiated
  • A new strategic plan developed.

In the process I faced three industrial actions or work stoppages in three consecutive years and, as one would expect, spent much energy to minimize the negative impact of public/political opinion which is usually opposed to changes of these magnitudes.

But we prevailed, and that success led to many other Crown Corporations being privatized, like the C.N.R.

There is one other contribution from my days at the helm of Air Canada which I believe may be of interest to mention here.

It is the introduction of non-smoking flights on the Toronto-Montreal sector, in response to the need of a specific market segment.

The announced threat of a boycott by the Tobacco industry gave us tremendous publicity and accelerated the movement against smoking in public places.

I would have to confess that I never imagined at that time that this relatively modest but bold move would have been a triggering event for the widespread ban on smoking which exists worldwide today.


I have always believed that in Canada there was room for only one major international aviation champion.

And I regret that I was unable to convince the government of the time to allow air Canada to lead the required restructuring.

My proposal was for Air Canada to purchase the international route network of Canadian Pacific Airlines, leaving C.P. Air with a much strengthened balance sheet and a domestic network able to provide the kind of domestic competition required by Canada.

Although the same end point has been achieved today, I can assure you that the earlier proposal would have been a lot less painful.


I would be remiss if I did not say anything about my 10 years at the helm of IATA – the International Air Transport Association.

That period has been summarized in a couple of chapters of a recently published biography.

Let me simply say that I take great pride in having been the first and the only Canadian to head this great international institution.

During my tenure I completely transformed this then rather stogie, bureaucratic organization into a customer-oriented aviation cooperative, safety focused – and a strong and respected voice of international aviation.

Let me give you two examples.

When I joined IATA in 1991, the Association’s yearly budget was $50 million USD and the dues paid by the members amounted to $27 million USD.

When I left in 2002, the budget was $300 million USD, the dues had been reduced to $17 million USD and, for that year alone, we achieved a surplus of $28 million USD.

The second example is about the role of IATA on the important subject of safety and accident prevention.

In 1991, IATA considered that it had no jurisdiction on this matter – which is technically correct.

The role of reinforcing safety measures was to be left in the hands of ICAO, the FAA, and the other government authorities.

I took a different view. As an Association of airline operators, I believed that safety should, in fact must be – IATA’s number one priority.

I will spare you the efforts which were required to change that mentality, but it will be sufficient to say that by 1995, at the IATA General Assembly, the membership accepted the objective to develop – and implement – programs designed to reduce the accident rate by half over the next ten years.

I am very pleased to say that that objective was reached by 2005!


But enough reminiscing.

Now the past is important – not only because of the lessons and the great memories it provides us – but perhaps more importantly because it contains the seeds of what will become our tomorrow.

It may be an obvious observation to state that “the future starts today”.

But when it comes to the future shape of our industry, I believe that if we take a look at the decade just ending, we should begin to see the forces which are in the process of reshaping our world.

I am convinced, if it is not already obvious, that the passage of time will confirm that this first decade ushered in the dawn of a new era in aviation.

The first decade of the new millennium was characterized by, among others:

  • Some spectacular attacks by kamikaze terrorists
  • A sudden and highly disruptive oil crisis
  • The continued pressure to meet consumer demand – and the progress achieved worldwide in liberalizing air markets
  • A deep economic recession which lingers on
  • The rapid economic growth of Asia, more particularly the economies of India and China
  • World-wide recognition of our contribution to climate change and, more specifically, of the need for aviation to reduce its carbon foot-print

All of these factors, and more, are irrevocably changing – and redefining – commercial aviation.


On the matter of the environment, the industry has set a target of zero increase in CO2 contributions by 2025.

Since we continue to project that traffic will double over the next fifteen years, it would mean that by then our CO2 emission per passenger/kilometer would have been reduced by 50%!

This is a very ambitious target which requires, among other things, that we accelerate the development – and mass production – of new fuels.

The aviation industry is embracing biofuel as the solution, and numerous initiatives are being undertaken to test and produce sustainable aviation biofuel.

Airlines and aircraft manufacturers are heavily involved in testing various alternatives, and several airlines have operated flights with a 50% blend of biofuel and conventional aviation fuel.

In the U.S.A. the Air Transport Association, ATA, and a division of the Department of Defense have formed a partnership for:

“The development and deployment of commercially viable,
environmentally friendly, alternative aviation fuel.”

Approval for a new class of fuels is expected in the second half of this year.

It is a huge requirement. The U.S. airline industry and the DoD collectively require more than 1.5 million barrels of fuel per day.

The results – in terms of carbon emission – of using various biofuel have been most exciting, with savings of up to 95% compared to fossil-fuel derived jet kerosene.

Additionally, a recent study endorsed by Boeing and an industry team concluded that a fuel blend of 50% petroleum-based jet fuel and sustainable biofuel gave excellent results.

The fuel blend met or exceeded all parameters required such as fuel freezing and flashpoint, etc. with no adverse effect on engine or components.

The study concluded, as well, that the fuels have greater energy content and could potentially lower fuel consumption per mile.


Naturally, we also expect that the new aircraft models will play an important part in the achievement of the carbon emission reduction targets.

The airline industry has been asking for new airframe and powerplant combinations capable of delivering fuel burn improvements in the neighborhood of 20%.

The significant increase in the use of composite material, improved aerodynamics, and more efficient engines, are likely to help us meet that level of improved performance over the next 15 to 20 years for the whole fleet.

Unfortunately launch and production delays have significantly hampered fleet renewal.

The Airbus A-380 has met – or exceeded – its expected performance in terms of dispatch reliability, noise, operating costs, and fuel burn.

But the manufacturer has yet to master the challenge of ramping up production.

Last year only ten Airbus A-380 were produced – and the hope is that the rate can be increased to 20 for this year (more than 140 were sold).

As a result of the delayed introduction – and the much lower than anticipated production rate – the program will remain a financial liability and will probably never recover its costs.

Extensive delays and additional cost have also plagued the introduction of the new Boeing B-787 – the so-called “Dreamliner”.

This airplane is still undergoing acceptance flight testing – and will not start delivery before the Fall of this year.

At this time, there is no reason to believe that this new family of airplanes will not fully meet expectations and offer savings of the order of 20% – or better – in operating costs and fuel consumption.

The standard version – the B-787-8 – with a seating capacity of 210 to 250, is expected to replace the Boeing B-767-300ER and the Airbus A-310.

The longer range and higher capacity version, able to accommodate from 250 to 290 seats, will enable many new route to be opened where today the market is too thin to be economically served by a Boeing B-777-300ER or an Airbus A-340-500/600.

Not to be outdone, Airbus has been developing a new long-range wide-body – the A-350 series – which once again promises to improve significantly on its current A-330 and A-340s.

The A-350-1000 – its larger, long range version – hopes to render obsolete some Boeing B-777 models.

The Airbus A-350-800 would be aimed at competing advantageously with the bigger version of the “Dreamliner”, more specifically the B-787-9.

And thus, the profile of the wide-body, long range, international fleet likely to be in service over the next twenty years or so, is already well known.

The airframe will be largely made of composite material; the aerodynamics will have been further refined; the engines will provide substantial improvements in fuel burn; safety and dispatch performance will be higher, resulting in further improvements in reliability and maintenance costs.


But what about the single-aisle, narrow-body fleet?

The two major aircraft manufacturers – Airbus and Boeing – are unlikely to launch into the design and development of a totally new narrow-body aircraft any time soon.

The primary reason is that they both need to complete their respective wide-body programs – and reap some of the resulting financial benefits – prior to committing to some other very costly development.

And secondly, they both should be extremely reluctant in developing, at this time, an entirely new narrow-body aircraft – which would render obsolete their very successful lines of A-320s and B-737 Next Gen.

Both lines continue to sell very well, and the only concern on the horizon would be whether the Bombardier “C” Series is likely to gain momentum and carve up a significant share of the bottom end of the two well-established single-aisle families.

Still another important question is whether both major manufacturers are satisfied with the engines which could be made available for a new narrow-body aircraft.

Wisely, Bombardier delayed its launch decision until it was assured that Pratt and Whitney could guarantee the availability of a new engine.

The Pratt and Whitney 1000G Geared-Turbo-Fan, which claims to deliver 12 to 15 percent lower fuel burn, was simply crucial to the “C” Series promise of 20 percent improvement over existing A-320 and B-737 NextGen current models.

Now CFM International has also proposed to enter the narrow-body engine market of the future with its LEAP-X, which borrows on the technology developed for the G.Enx engine.

CFM claims that the LEAP-X will also deliver 12 to 15 percent better fuel burn.

There seems to be a consensus that neither Airbus nor Boeing will come up with a “clean-sheet” design for a narrow-body series before 2024-2025.

However, both manufacturers are today seriously examining what they would need to do to put new engines on an upgraded version of their aircraft – raising the prospect of a modernized, re-engined A-320 and B-737 family emerging some five years from now.

A key question would be whether they would move now or wait for a second generation already proposed by Pratt & Whitney for its Geared-Turbo-Fan.

The decision by the major manufacturers to offer a re-engined A-320 – and B-737 – five to six years from now will undoubtedly reduce the market share the “C” Series of Bombardier is hoping to capture.

Airbus believes that a re-engined A-320 would improve fuel burn, per seat, by 13 to 15 percent.

The market share of the “C” Series will be very much affected by the timing of the re-engining decision, the price of fuel and whether – following re-engining – the “C” Series would still benefit from a 10 percent or so fuel burn advantage.

One way or another, the composition of the world’s airline fleet over the next 15 to 20 years is already clearly evident.


Worldwide deregulation of air markets has progressed rather slowly – but steadily.

In contrast to some other industries, there was no “big bang” – nor has the subject ever been discussed seriously at the World Trade Organization.

The genesis of deregulation can be traced back to the initiative of the Carter Administration, in the late 1970’s, to liberalize the U.S.A. domestic market.

This was quickly followed in Canada with the White Paper of the Mulroney Government entitled “Freedom to Move” – which set the stage to totally free up the domestic Canadian market.

During the 1990’s the European Community – also through a staged process – created an integrated air market.

Internationally, the U.S.A. “Open Sky” initiative endeavored to negotiate air bilateral agreements which removed any constraints as to pricing, capacity, or points served between the U.S.A. and other countries.

This type of highly liberalized air bilateral agreement has progressively become the norm in most of the air bilaterals being negotiated today.

The globalization of trade, the rapidly increasing use of electronic networks potentially linking all human beings have all contributed to the emergence of the global village which favors – and supports – greater worldwide liberalization of the air markets.


And thus powerful forces are at work re-shaping the profile of the aviation industry.

New business models have emerged; previous business models have had to question their relevance and redefine their roles.

One thing is quite clear: the days of government-owned national airlines are over.

A nation can no longer afford the luxury of subsidizing a flag carrier.

The constraints of government ownership – and the inefficiencies that came with it – render such an organization incapable of coping successfully with the intensely competitive environment which today characterizes our industry.

One of the significant factors that has forced the re-structuring of the traditional network has been the emergence – and the surprising strength – of the so-called “low cost” carriers.

Southwest Airlines – which came into pre-eminence in North America during the 80’s – is generally considered the “grand daddy” of the low costs.

During the aftermath of the U.S. deregulation many new carriers came into being -attempting to follow the Southwest model.

Most were unable to survive past the next economic recession.

It was up to Europe to re-launch the concept. New carriers such as Easyjet, Ryanair, and others gave the low cost model new impetus.

Today, low cost carriers have established a presence in every region of the globe, exerting strong competitive pressure on the more traditional airlines.

The speed with which the low costs imposed themselves in the market place has to some degree taken the traditional carriers by surprise.

They have been compelled to redefine their presence in the market and to adjust their domestic and regional networks.

The growth of the “low cost” carriers has been nothing short of remarkable.

A recent study published by the Centre of Asia-Pacific Aviation indicates that the total growth of the world capacity deployed since 2001 is equal to the growth experienced by the “low costs”.

Indeed, over the same period, the capacity offered by the traditional airlines was slightly diminished.

And the number of seats flow by the “low costs” grew from 7 percent to 22 percent of the total!

Not every new entrant has been successful but still – by the end of last year -approximately two thirds of all newcomers since 2000 had survived.

Which means – adding up the players present in all the regions of the world – that some 128 “low costs” were in operation.

What makes the “low cost” business model so successful is, of course, the simplicity of its operation.

It is a no-frills service – a single class, one type of aircraft only, with high-density seating and high aircraft daily hour utilization.

A low cost generally has low overhead, few fixed costs, extensively out-sources, employs younger, lower-paid employees – and distributes its products almost exclusively through electronic media.

Recent experience has evidenced the fact that low-cost carriers are more affected by sudden fuel cost increases than the traditional airlines.

This is simply because fuel represents a much larger component of their operation costs – and consumer resistance makes it that much more difficult to pass on the increase to the traveler.

On the other hand, the traditional airlines are more affected by an economic recession because many companies tend to implement cost-cutting measures which temporarily reduce traveling – and/or require their management to travel Economy rather than Business Class.


Buffeted by extensive competitive forces and to take advantage of the new flexibilities offered by the more recent regional economic integrations, several traditional airlines have decided to re-group – or merge – to ensure their survival.

The question appears already largely settled in Europe where, for all intents and purposes, most of the so-called “national carriers” have joined one of the three distinct airline groups respectively led by Lufthansa, Air France, and British Airways.

Lufthansa, which earlier absorbed Swiss International, the former Swissair, has more recently completed the acquisition of Austrian Airlines, British Midland and Brussels Airlines, a quasi low cost created following the demise of Sabena.

Air France and KLM were first in Europe in successfully completing their merger. The model they developed has, in some ways, set the pattern for others to follow.

The Air France/KLM Group has also recently acquired an important participation in Alitalia, which commits the Italian national carrier to become part of their group eventually.

The third European group, comprised of British Airways and Iberia, is now completing its much delayed merger. The difficulties experienced by British Airways – not the least being pension liabilities – have among many other things complicated the merger process.

Of course there are many other national airlines that have so far remained independent, but it will be increasingly difficult for all of them not to join one or other of the groups or to participate in some form of merger.

In North America a similar phenomenon is present – and we have recently witnessed the merger of Northwest and Delta Airlines.

United Airlines – having failed on many occasions to arrive at a satisfactory arrangement with US Air – is completing a merger with Continental Airlines.

Following the merger of Northwest and Delta, Continental – which was previously allied to Northwest – felt somewhat like an orphan.

It is already clear that three major traditional airlines regroupings are emerging in the U.S., each aligned with one of the three major European groupings.

Joint ventures across the Atlantic have already been in the making, with the Air France/KLM Group and the Delta/Northwest group concluding a commercial agreement which brings under one umbrella all their respective trans-Atlantic services.

The same approach is being developed by Lufthansa, United/Continental and Air Canada – and it would be surprising if American Airlines and British Airways do not chose to conclude a similar agreement.

All these activities clearly point to setting the stage for a “mega merger” of airline groups on both sides of the Atlantic, should that ever be permitted under the U.S./European Community bilateral agreements.

Where does this leave Air Canada?

Air Canada is today an important member of Star Alliance. Its strongest partner is the Lufthansa Group, and its largest partner is United Airlines. The current bilateral agreements preclude the possibility of Air Canada being acquired by – or for that matter acquiring – another non-Canadian airline.

If we assume that eventually cross-border mergers will be permitted, it is important for Air Canada to substantially strengthen its financial position in order to ensure that it can be an important player in any potential cross-border merger in the future.

The process of regrouping airlines is going on, as well, in other regions of the world – in particular in Latin America with the activities have been led by the Lan Airlines, TACA (the Central American airline), and the restructuring that has been ongoing in Brazil.


It is most interesting that despite the difficulties experienced by national carriers to survive under the pressure of the low costs, new airlines which could be called “national airlines” have emerged and are rapidly establishing a position in the international market.

Over the last decade, three small States in the Persian Gulf have developed ambitious new hubs and are actively engaged in expanding their operation into the sixth freedom market which exists between their tiny States on the one hand – and Asia, Europe and America on the other.

Emirates (based in Dubai), Etihad (operating from Abu Dhabi) and Qatar Airways whose operation is in Doha have all ordered large fleets of aircraft.

To illustrate their ambitions, Emirates has put in an order for 53 Airbus A-380s and 70 Airbus A-350s.

In the case of Qatar Airways, they have recently put in an order for 80 Airbus A-350s and five A-380s.

It remains to be seen if, in the present context, these three new airlines based in the Gulf will actually be able to grow and prosper.

The Asian market is growing very rapidly – and this is particularly true for the Indian Sub-Continent and China. In both of these large regions, international airlines are growing and are likely to become stronger.

The availability of new airplanes with long-range capabilities allowing flights to operate directly between Asia, Europe and North America, for instance – using Boeing B787s and Airbus A-350s – will easily enable any Persian Gulf hub to be bypassed.

This situation suggests that price competition involving those very important Asian markets will likely be very active in the next timeframe.


The recession in Asia has been short-lived and the growth of air traffic is once again nearing double digits.

The Asia-Pacific region has just recently surpassed North America in terms of annual passengers boarded – more specifically, 647 million passengers vs. 638 million passengers in 2009. It is forecast that in a few years from now, the Asia/Pacific region will represent 50 percent of total air traffic worldwide.

The other regions that are also enjoying excellent air traffic growth are South America – particularly Brazil – and of course the republics that were previously part of the Soviet Union.

And we should not forget about Turkey which, with its large population, is also growing very rapidly.

Canada – with its relatively modest population growth and very mature air market – is likely to see its relative weight in terms of air traffic diminish on the world scale.


Lastly, it is worth mentioning another small but growing business model used in addressing the needs of an important segment of air travel demand.

Until the last economic recession, the number of private and corporate jets was increasing rapidly.

Tongue-in-cheek, one might be tempted to say – that the more recent increase in executive remuneration was driving this expansion!

You may remember images of the U.S. automotive industry’s top brass flying to Washington – in their private jets – to beg for tens of billions of dollars of bailout money to save their respective companies.

The utilization of private airplanes has been made increasingly affordable by various formulae such as “fractional ownership” – or simply by contracting over a period of time with a supplier willing to guarantee aircraft availability when required.

For instance, NetJets – with a fleet of over 800 aircraft – can provide you access to thousands of airports on request, if you have contracted with them – with guaranteed availability within four to ten hours, when and where you need it.

Additionally, there is no doubt that the security-related hassle and confusion at most airports has contributed to the popularity of private and semi-private aircraft which enable to user to largely by-pass this frustrating experience.

Although the economic crisis has dampened this expansion, we should fully expect that this sector will soon recover with vigorous growth.


The most recent forecast published by Airbus Industries predicts that by the year 2028 air traffic demand will have nearly tripled and that the fleet of passenger aircraft with over 100 seats will have grown from some 14 thousand in 2009 – to over 28 thousand in 2028.

To accommodate this projected growth, congestion of the various infrastructures will be a major issue – if not vigorously addressed.

One factor helping to fuel this congestion is the growth of the world’s major cities – coupled with the fact that more people are becoming economically mobile.

This, you may recall, was mentioned as a major factor in the decision by Airbus to build the A-380.

This “very large airplane” substantially increases the number of passengers which can be carried on any one flight between the mega urban centers.

Equally valid was the strategy developed by Boeing in proposing the B-787-9, its long range version aimed at opening new city-pairs and creating many new mid-size hubs.

Fortunately, the need to modernize both the European and the American air traffic control systems has finally been recognized.

SESAR is the European 1.9 billion Euro initiative which is involving the European Community, Eurocontrol and 16 partners – institutes, airports, firms – over a seven year period.

The SESAR project will unify Europe’s ATM Systems; create capacity to handle a threefold increase in flight movements; improve safety by a factor of 10; and reduce by 10 percent the environmental impact per flight.

SESAR components and procedures will be progressively implemented from 2010 to 2020.

The U.S.A. Next Generation Air Traffic Management System – NextGen – has been under development for some time.

The new system will introduce cutting edge, satellite-based navigation technologies with more precise flight tracking.

NextGen will provide a single infrastructure and Information Management System, improved data links, and a single weather information system.

It is projected that NextGen will need a further $20 billion US up to 2025 to complete its development.

The objectives for NextGen are similar to those of SESAR – with the FAA claiming that the new system will save up to $2 billion US dollars per year in fuel.


What can we conclude regarding the future evolution of commercial aviation, given the forces at work reshaping the industry?

Or if you prefer, if we were holding this conference in 2025 – what would we be able to write about our recent past?

I believe that we would be able to observe the following:

The desire to travel and see the world – and the need to travel for business reasons – has continued to grow worldwide.

Our earlier forecast – calling for traffic to double every fifteen years – has proven correct and we carried approximately five billion passengers in 2025.

Much of that growth has come from Asia-Pacific, with China and India providing the lion’s share.

However the CIS countries – the former Soviet Republic as well as Latin America and the Middle East – are also important contributors to that growth.

Europe and North America have implemented an integrated air market

This new EC-North America air bilateral has enabled European and North American airlines to hold merger discussions.

In most regions of the world, low cost airlines have achieved a 50 percent share of the regional/domestic market.

Driven by renewed economic affluence, the number of private and corporate airplanes operating in fractional ownership mode or its equivalent has more then doubled.

An increasing number of companies have found that contracting for a certain number of hours per year to make private jets available for their executives, on demand, to be cost-effective in the midst of the rapid acceleration of business globalization.

Significant improvement in air traffic control capacity resulting from the implementation of the various components of SESAR (Europe) and NextGen (USA) have been achieved.

Unfortunately as in most government driven programs, costs far exceeded the original estimates.

Non-military use of unmanned aircraft has been increasing causing safety concerns and a potential increase in air traffic congestion.

Biofuels have become firmly established and have become the new norm for both commercial aviation and military use.

The production of biofuels is now targeting some 50% of the air industry’s requirements. Traditional petroleum companies have invested heavily in this new industry.

I leave you to imagine the resulting impact on the tar sands and some of the more expensive off-shore and arctic oil operations.


The combination of the electronic networks and sophisticated biometrics have given air travelers full control in handling their travel needs, as well as checking and boarding at the airport.

While they have been doing their own seat reservations for many years, the printing of boarding cards was discontinued as travelers are now simply biometrically scanned to allow boarding at the gate.

Similarly, a chip on their baggage will automatically identify the luggage with the traveller and ensure that it is routed appropriately.

This has led to a virtual disappearance of airline customer service staff at airports.

Airlines however have compensated to some extent by making extensive use of web-based social networks.

Airlines have been using Twitter-like networks to listen to what their customers have to say – and have also found this social network to be a good way to promote their fare sales.

A version of Facebook is also used extensivelyto keep a personal contact with the traveler and provides a platform for discussion.

As a result of greater use of their partly customized social network, this way of reaching the customer has diverted much of the funds and resources previously allocated to the more traditional channels of marketing and advertising.


Ladies and gentlemen

Back in 2010 we observed that the airline industry had lost more money than it had ever made over its entire history.

Some of you may recall that we were at that time in the aftermath of a very painful and prolonged economic recession which had been triggered by a disastrous financial crisis.

The airline industry recovered over several years – but its financial situation remained somewhat fragile.

Since then we have suffered two more economic recessions, and having failed yet again to learn how to manage through these crises, the financial situation of the airline industry has not improved.

I seem to recall that back in 2009, Warren Buffet – the famous financial guru from Omaha – was asked what he thought of the airline industry.

Mr. Buffet was reported saying:

“If someone had taken the initiative to shoot down the first flight of the Wright Brothers, that person would have rendered a great service to the financial community.”

You may also recall that Warren Buffet had made a substantial investment at the time in a railroad, which later paid him handsomely.

It is somewhat puzzling that despite benefiting from

  • Spectacular periodic technical progress
  • Use of the latest procedures and techniques
  • Constant gains in productivity
  • Adaptation of its business models

the industry has completely and consistently failed to earn its cost of capital.

The airline industry has constantly defied economic logic – the logic which suggests that in periods of economic crises and instability, the weak and loss making companies leave the market.

The disappearance of some companies normally brings supply and demand back into equilibrium, which eventually allows prices to increase and permits the survivors to achieve an adequate return on investment.

But the airline industry has rarely reached such a point of equilibrium – and when it did it lasted only for fleeting periods.

The drive to increase market share continues to fuel the tendency for the whole industry to provide far too much capacity.

And government-run export credit agencies have continued to make airplanes more available than the financial system would normally permit.

Thankfully, an increasing number of air carriers – and that includes Air Canada – have shown that it is quite feasible to be consistently profitable, giving signs that maturity is setting in.

But despite those encouraging signs, for a large number of airlines their shareholders should be reminded that an airline stock is still one of those where the only sure way to make money is to buy it when it’s low – and sell it when it is high.

But perhaps those shareholders should console themselves by remembering that they are contributing to a great industry which is a very unique human endeavor – and which has brought enormous socio-economic benefits to the world.

Without the continuous, safe and dependable operation of the global airline network, worldwide business and trading would collapse – with untold economic consequences.

This has been amply demonstrated each time airline operations have been interrupted for one reason or another.

Despite having become such a large mass transportation business, flying has managed to remain for many of us a fascinating and wonderful experience.

We have learned to defy the laws of gravity – and in the process opened the door to space travel.

Finally ladies and gentlemen let me say, in retrospect, that I have very much enjoyed every minute of the many years that I have been part of this industry.

It may not be one where everyone can make “real money” but one can usually earn a “decent living” – and you are guaranteed to have lots of fun!

I feel honored and privileged to have been asked to address your 115th anniversary of the first meeting in Montreal …

And given my advanced age, I must say that I am quite grateful that I am still around.

Thank you

Address to the Club économique Québec-France

L’aviation: Paradoxes et paradigmes
Allocution de Pierre J. Jeanniot au Club économique Québec-France
Paris, France, 25 Mars, 2010  >>


Monsieur le Délégué général du Québec
Membres du prestigieux Club économique Québec-France
Distingués invités et chers amis

Je tiens en tout premier lieu à remercier le Délégué général du Québec, notre bon ami Wilfrid-Guy Licari, pour son aimable invitation.

Je tiens à lui dire combien je suis honoré d’être ici aujourd’hui, et d’avoir le plaisir de m’adresser à ce prestigieux forum économique.

Je suis également particulièrement heureux et reconnaissant de voir ce soir les visages familiers de plusieurs personnalités avec lesquelles j’ai eu le privilège de collaborer à l’un où l’autre moment de ma carrière.

Une carrière qui, malgré mon jeune âge, dépasse largement le demi-siècle.

Pour emprunter à Charles Aznavour qui à cette époque venait de composer « La Bohème », je pourrais vous dire à l’instar de Charles :

« Je vous parle d’un temps que les moins de cinquante ans ne peuvent pas connaître ».

Les voyages en avion en ce temps-là n’étaient pas aussi sécuritaires qu’aujourd’hui. Par contre, on rapporte qu’à cette époque l’amour libre comprenait moins de risques qu’aujourd’hui.


Il y a des moments dans la vie des gens qui sont tout simplement déterminants sur l’évolution de leurs vies – qui marquent un tournant important, qui ouvrent une nouvelle voie, ou simplement une soudaine accélération.

Il en est de même pour une industrie ou pour une région.

Il y a cent ans, ou plus exactement du 24 juin au 2 juillet 1910, se tenait en banlieue de Montréal, sur une ferme de Pointe-Claire, le premier congrès international de l’aviation.

Lors de la clôture de ce congrès, soit le 2 juillet 1910, a eu lieu un survol pour la première fois de la Ville de Montréal par un avion.

Il s’agit d’un vol effectué par le Comte Jacques de Lesseps au-dessus de Montréal dans un Blériot XI qu’il avait amené par bateau, évidement, pour faire des vols de démonstration en Amérique du Nord.

Jacques de Lesseps était le fils aîné du non moins célèbre Ferdinand de Lesseps, le concepteur du Canal de Suez !

Il va sans dire que ce premier vol avait créé beaucoup d’émoi chez les Montréalais !

C’est peut-être ce premier congrès et ce premier survol qui a été l’élément déclencheur et donc le début d’un grand intérêt pour l’aérospatiale devenue depuis une longue tradition au Québec.

Il est clair que dès ces tout débuts les Montréalais et les Québécois se sont passionnés pour l’aviation, et grâce à cet intérêt soutenu nous avons aujourd’hui la richesse et la diversité des activités aérospatiales que nous connaissons.

Je n’ai pas besoin de vous rappeler que le Québec regroupe près de 60 % de toute l’industrie canadienne aérospatiale, et que Montréal et ses alentours est considérée comme un des trois pôles mondiaux de cette importante industrie.

Je signale en passant que Jacques de Lesseps s’était vu confier, quelques années plus tard, un contrat du gouvernement du Québec pour établir par les airs une cartographie détaillée de la péninsule gaspésienne.

C’était peut-être là aussi précurseur de l’entente sur la reconnaissance mutuelle des compétences entre la France et le Québec, un sujet favori de notre Premier Ministre Jean Charest.

Notre pays, de par sa géographie quelque peu hostile et son climat rigoureux, nous a imposé d’importants défis.

L’aviation nous a aidés à y répondre en construisant des appareils pouvant se poser sur nos innombrable lacs, en hiver comme en été, avec flotteurs ou skis !

Mais il fallait aussi des hommes intrépides, des nouveaux pilotes prêts à inventer de nouvelles techniques.

Je m’en voudrais de ne pas souligner ici les formidables contributions de pionniers, tel que Roméo Vachon qui a pour ainsi dire inventé l’art de l’aviation de brousse au Québec et au Canada, et dont les techniques d’opération en terrain difficile nous ont valu une réputation mondiale.


Notre Délégué général a eu l’amabilité de rappeler qu’un ouvrage biographique vient d’être publié à mon sujet par deux éminents professeur et chercheur de l’École des Hautes Études Commerciales de l’Université de Montréal.

Il m’a suggéré de vous parler brièvement de quelques aspects de mes contributions à l’aviation commerciale, ainsi que quelques réflexions sur l’aviation aujourd’hui et son évolution.


On m’a souvent accusé d’être l’inventeur de « la boîte noire ».

Vous aurez évidement compris qu’il s’agit de cette enregistreuse de vol que l’on recherche frénétiquement suite à un accident d’avion afin de bien comprendre ce qui s’est passé.

À l’instar de bien autres inventions, la fameuse boîte noire est le fruit d’une évolution où plusieurs ont contribué.

Je crois qu’il est difficile pour quiconque d’en revendiquer la paternité.

Depuis la fin des années 1950, il existait aux États-Unis une petite enregistreuse de vol qui notait sur une bande d’aluminium à l’aide d’un stylus de métal six paramètres soit l’heure, la vitesse de l’appareil, sa direction, son altitude, et son inclinaison ainsi que la pression à l’intérieur de la cabine.

En 1958, Air Canada avait installé cette enregistreuse dans sa flotte de DC-8 et de Vanguard.

Malheureusement lors d’accidents d’avions, la feuille de métal sur laquelle étaient gravées les données était soit détruite, soit rendue illisible, parce qu’elle n’avait pas résisté à la force de l’impact ou à l’intensité du feu qui souvent accompagne ces accidents.

Ce fut malheureusement le cas lors de l’écrasement d’un DC-8 d’Air Canada le 29 novembre 1963, peu de temps après son décollage de l’aéroport de Montréal.

La petite enregistreuse avait été pulvérisée !

Peu de temps après l’accident de ce DC-8, une petite firme anglaise était venue proposer à Air Canada un magnétoscope analogique, qui avait la capacité d’enregistrer jusqu’à concurrence de 90 paramètres à toutes les trois secondes.

Ils affirmaient que ce nouveau système pourrait grandement aider à faire de l’entretien préventif.

La haute direction d’Air Canada avait fait l’acquisition d’un bon nombre de ces systèmes et, sans avoir vérifié suffisamment leur efficacité, m’avait chargé de procéder à leur installation et à développer le mode d’emploi.

Assez rapidement, je suis arrivé à la conclusion que la merveille britannique n’était absolument pas fonctionnelle.

Le rapport de mon évaluation fut fort mal accueilli par mes supérieurs, et j’en demeurais très inquiet.

Après tout, il n’est pas rare que le porteur de mauvaises nouvelles soit exécuté !

On dit parfois que la nécessité est la mère de l’invention, et quelques jours plus tard m’est soudainement venue l’idée que cette enregistreuse – inutile pour faire l’entretien préventif – pourrait sans doute être utile en cas d’accident.

Mais il faudrait trouver une façon de protéger l’enregistrement pour qu’il survive à un écrasement, et choisir les paramètres les plus appropriés.

L’inventeur fut très heureux de coopérer, et quelques mois plus tard nous avions conçu une sphère pouvant résister au choc et au feu, dans laquelle la bande enregistrée serait installée …

Quelque deux ans plus tard, une deuxième enregistreuse fut ajoutée – celle-ci enregistrait la voix.

Quarante ans plus tard dans un discours en quittant la direction de l’IATA, j’ai déclaré que la « boîte noire » telle qu’encore conçue aujourd’hui était obsolète.

Je disais alors que l’avènement des communications par satellites permettait, d’ores et déjà, le transfert des données contenues dans la « boîte noire » instantanément au moment d’un événement critique, sans avoir à rechercher l’enregistreuse.

La perte d’un long courrier d’Air France l’été dernier dans l’Atlantique Sud semble avoir remis ma suggestion à l’actualité.


Le deuxième sujet que je me propose d’aborder en est un que j’ai choisi avec beaucoup d’hésitation à cause de l’émotivité qui a entouré ce sujet , et qui d’ailleurs l’entoure encore toujours.

Il s’agit de l’interdiction de fumer dans les lieux publics.

Pour ceux d’entre vous qui aimez encore griller une cigarette ou un bon cigare après un grand repas, je dois vous dire que j’étais très loin de m’imaginer que l’interdiction de fumer sur quelques vols d’Air Canada allait progresser – je devrais probablement dire « dériver » – au point d’activer encore aujourd’hui de chaudes controverses.

Comme par exemple dans les bistrots et restaurants parisiens.

Au début des années 1980, je recevais quotidiennement des plaintes de clients qui jugeaient que la division en cabine entre espace fumeurs et non- fumeurs n’était pas satisfaisante.

Ces clients exigeaient – ni plus, ni moins – des vols non-fumeurs.

En réponse j’avais commandé plusieurs études de marché à mon équipe de marketing, mais chaque fois l’étude indiquait que des vols non-fumeurs nous feraient perdre de l’argent.

C’était sans doute une coïncidence que la grande majorité des membres de l’équipe de marketing était des fumeurs !

Passant outre ces savantes analyses, je décidai de suivre mes intuitions.

J’ai donc convoqué l’équipe de marketing pour leur annoncer qu’en dépit de leurs études, j’avais décidé que la moitié des 26 vols quotidiens entre Toronto et Montréal serait dorénavant non-fumeurs – et ce pour une période expérimentale de trois mois.

Il me semblait que le choix devait satisfaire tout le monde.

Aussitôt l’annonce lancée, des réactions positives – et négatives – ne se firent pas attendre.

Les associations reliées à la lutte contre le cancer furent les premières à saluer chaleureusement l’initiative.

Chez les opposants – tout aussi militants – Paul Paré, le PDG de la société IMASCO, avait pris le leadership de la contestation et il annonça dans une déclaration publique que toute l’industrie du tabac avait décidé de boycotter Air Canada.

Il est utile de rappeler qu’IMASCO, qui contrôlait le plus important fabriquant de cigarette au Canada, Imperial Tobacco, avait diversifié ses activités et possédait également une chaine de pharmacies, aussi qu’une compagnie d’assurance.

Dans la semaine suivant l’annonce du boycott, j’avais reçu 162 lettres d’appui qui indiquaient que, si le boycott se maintenait, ces mêmes gens étaient prêts à boycotter toutes les autres activités d’IMASCO.

J’invitai Paul Paré à déjeuner a fin de discuter de la situation.

Au début du déjeuner, Paul Paré réitéra sa position avec véhémence.

J’écoutais patiemment, et lorsqu’il se fut un peu calmé je lui ais dit que je n’avais aucunement l’intention de prendre position pour – ou contre – la cigarette.

Je n’avais d’ailleurs pas les compétences pour le faire.

À mon avis, il s’agissait simplement d’une question de segmentation du marché.

Après tout, ne devrions-nous pas laisser le marché décider ?

Et à ce moment là … je lui remis … une copie des 162 lettres de clients et des diverses associations … qui appuyaient l’introduction des vols non-fumeurs.

Je lui fis remarquer qu’un grand nombre de ces lettres affirmaient que si IMASCO mettait à exécution son boycott d’Air Canada, ceux-ci boycotteraient à leur tour tous les produits d’IMASCO – en particulier ceux des pharmacies et des compagnies d’assurance.

Que devrais-je leur répondre ?

Paul Paré comprit rapidement qu’un boycott de ses compagnies d’assurance et de la chaîne de pharmacies représentait des millions de dollars de chiffre d’affaires menacés.

Il demanda quelques semaines de réflexion pour revoir la situation avec ses partenaires.

Et quelques semaines plus tard tout était rentré dans l’ordre et la menace de boycott avait tranquillement disparu.

Contrairement à une perte de clientèle, Air Canada eut la satisfaction d’accroître sa part de marché de 5 % sur Toronto-Montréal dans les semaines qui suivirent.

Le gouvernement canadien décida l’année suivante d’emboîter le pas et décréta que dorénavant tous les vols au Canada d’une durée d’une heure et demie ou moins seraient non-fumeurs.

Comme aurait dit Shakespeare « The rest is history », et comme chacun peut le constater, à toutes fins pratiques, mondialement, tous les vols sont non-fumeurs – et quelles que soient leurs durées.


Parmi les autres tournants de l’histoire de l’aviation commerciale dans lesquels j’ai eu une participation active, je pourrais vous citer aussi, par exemple, la création de la classe affaire.

Le service de marketing, qui s’était remis de sa déconfiture dans la question des vols non-fumeurs, avait identifié un segment de plus en plus important du marché qui était insatisfait du service offert.

Il s’agissait, évidement, des gens d’affaires qui ne pouvaient accepter de payer le prix d’une première classe mais qui, par contre, avaient besoin de plus de confort que ce qui était disponible en classe économique.

L’introduction d’une troisième classe posait de sérieux problèmes de réaménagement de la cabine afin de créer un espace et une ambiance propice aux gens d’affaires.

Suite à une première introduction difficile suivie d’un « « recalibrage », cette nouvelle classe avait trouvé le niveau de prix-qualité qui répondait aux attentes des gens d’affaires.

Nos efforts furent récompensés non seulement par une meilleure recette unitaire, mais aussi par des gains de part de marché sur les vols transatlantiques et les longs courriers en Amérique du Nord.

Finalement, l’attribution à Air Canada par l’autorité à l’époque – soit le « Air Transport World » – du trophée de la meilleure ligne aérienne au monde en 1985 pour l’excellence de son service à la clientèle vint couronner nos efforts.


Je crois que je pourrais aussi essuyer le blâme pour l’introduction des programmes de fidélisation, quoique je partagerais volontiers tout reproche à ce sujet avec mon ami Bob Crandall à l’époque PDG d’American Airlines.

Le programme d’Air Canada – Aeroplan – et celui d’American Airlines ont pour origine une intense rivalité qui visait à dominer le marché des gens d’affaires sur les liaisons entre le Canada et les États-Unis.

Le programme que nous avions créé en 1985 est aujourd’hui une société indépendante d’Air Canada, qui commercialise des activités de fidélisation.


Il serait sans doute opportun de prendre maintenant quelques minutes afin de revoir certaines des transformations qui se sont opérées à l’IATA sous ma direction.

L’IATA, comme chacun le sait, est l’Association internationale du transport aérien.

Elle a été créée en avril 1945, quelques mois après la création de l’O.A.C.I. – l’Organisation de l’aviation civile internationale – et par les mêmes diplomates et hauts fonctionnaires.

Dès mon arrivée à l’IATA, j’ai constaté jusqu’à quel point je venais d’être élu à la tête d’une grande bureaucratie internationale – lourde, et paralysante.

Le premier directeur général provenait de la haute fonction publique britannique. Il avait dès le départ implanté un style de gestion qui était probablement semblable à celui du ministère des transports de l’époque.

Son successeur, un ambassadeur suédois, avait laissé la machine bureaucratique se déployer dans toute sa force.

Finalement le troisième, celui auquel je venais de succéder, avait été un des co-présidents de la Lufthansa qui était, lui aussi, très à l’aise avec ce style de gestion.

En parlant de bureaucratie, je me rappelle très bien d’une de mes visites en Inde durant laquelle j’avais rencontré le secrétaire général du gouvernement indien en matière de transport aérien.

Je plaidais alors la cause des lignes aériennes de ce continent qui à cette époque étouffait littéralement sous une bureaucratie paralysante.

Avec un sourire – et un clin d’œil – le secrétaire général me dit

« Vous devez comprendre, Monsieur Jeanniot, que notre bureaucratie nous vient des Britanniques, et comme vous pouvez le constater – nous l’avons perfectionnée ! »


À mon arrivée à l’IATA en 1991, le budget de l’organisme était de 50 millions de dollars, et les redevances que les compagnies aériennes membres lui versaient s’élevaient à 27 millions de dollars.

Afin d’illustrer le chemin parcouru, il suffit d’observer qu’à mon départ en 2002, le budget s’élevait à 300 millions de dollars, les redevances n’étaient plus que de 17 millions de dollars, et l’IATA avait pour cette année seulement réalisé un surplus de 28 millions de dollars.

De bureaucratie internationale, l’IATA était devenue un organisme souple – à l’écoute de ses membres, et de ses clients.

Elle était toujours l’organisme qui représente les intérêts des lignes aériennes auprès des gouvernements, des agences de navigation aérienne, des aéroports, etc.

Elle était toujours aussi le forum où tous les nouveaux standards, nouvelles pratiques, et systèmes opérationnels se développent.

Mais elle était aussi devenue une coopérative internationale, offrant toute une gamme de produits et de services d’utilité aux lignes aériennes et aux autres acteurs du transport aérien.


Toute profonde restructuration d’un organisme tel que celui-ci se doit de commencer par une refonte des mécanismes de gouvernance.

C’est un processus long en lui-même puisque cela requiert, entre autres, une approbation par une assemblée générale.

Je vous fais grâce des détails mais deux ans plus tard les statuts avaient été révisés et modernisés.

Il s’agissait maintenant de revoir et d’actualiser le rôle de l’IATA dans le contexte d’une industrie de plus en plus soumise aux pressions de la libéralisation des marchés, et de la libre concurrence.

Il fallait rapidement transformer la culture de l’organisation – une opération que j’avais dû accomplir à Air Canada avant de pouvoir commencer le processus de privatisation.

De façon similaire, avec l’aide d’un cabinet de consultation spécialisé en ce domaine, un programme fut mis sur pied.

Ainsi les 1100 employés furent embrigadés, sur une période de deux ans, dans des sessions intensives de sensibilisation au service à la clientèle.

Cette révolution culturelle ne faisait pas l’affaire de tous, et malheureusement il fallut procéder à inciter les récalcitrants à partir.

Finalement, presque par l’osmose, une nouvelle culture a émergé.

Les employés y avaient pris goût appréciaient la plus grande liberté d’action et le plaisir de satisfaire les membres et les clients.


Lorsqu’un organisme bureaucratique est confronté à un nouveau défi qui requiert des ressources qui n’avaient pas été prévues auparavant, trop souvent la réaction naturelle est de demander des fonds supplémentaires.

La pratique était courante à l’IATA.

Quelques mois après mon entrée en fonction, je me vis confronté à une demande de ce genre.

Je refusais catégoriquement. Nous devions, dès maintenant, apprendre à redéployer nos ressources en fonction des priorités, et augmenter notre productivité.

Cela faisait partie du changement de culture qu’il s’agissait d’installer.

D’autant plus que – malgré le fait que le nombre de nouveaux problèmes et défis augmentait – nos membres espéraient voir une diminution substantielle de leurs redevances.

La solution était évidente. Il s’agissait de prendre avantage des compétences et services existants, et d’y greffer des services optionnels qui seraient offerts à toutes les lignes aériennes moyennant une rétribution raisonnable.

Certains produits et services pourraient également être offerts à d’autres intervenants de l’aviation.

L’IATA étant une organisation à but non lucratif, tous les surplus générés par l’activité commerciale étaient réinvestis chaque année pour augmenter les services aux membres, répondre aux nouvelles demandes, et diminuer graduellement les redevances.

Il va sans dire que, afin de compléter la révolution culturelle, les mécanismes de rémunération des employés ont été complètement modifiés afin de mettre l’accent sur la performance et les résultats obtenus.


La gouvernance de l’IATA ayant été modernisée, la culture de l’entreprise radicalement changée, et le financement de nouveaux projets assuré, il était désormais possible de s’attaquer avec vigueur aux nouveaux défis auxquels notre industrie faisait face.

Trois facteurs avaient le potentiel de limiter sérieusement la croissance du trafic aérien.

Il était important de diminuer

le taux d’accidents d’avion
l’impact de notre industrie sur l’environnement
les problèmes de congestion tant aux couloirs aériens qu’aux aéroports.


J’ai toujours prétendu que la sécurité se devait d’être la première préoccupation de tout dirigeant de ligne aérienne.

Or dès mon arrivée à l’IATA, j’avais constaté que – mis à part la publication de quelques statistiques – la sécurité n’était pas un sujet de préoccupation officiel.

On considérait que l’IATA n’avait aucune juridiction en la matière et que c’était aux états et à l’OACI à prendre des mesures et émettre de nouvelles directives.

Au milieu des années 1990 on enregistrait, en moyenne, un accident à tous les quinze jours quelque part sur la planète.

Si on laissait aller les choses, compte tenu de l’accroissement prévisible des vols à l’échelle mondiale, on en viendrait dans dix ans à déplorer un accident par semaine.

C’était inacceptable. Il fallait agir – et un groupe de travail fut mandaté pour faire une étude exhaustive des différentes catégories d’accidents, leurs natures, leurs causes, les régions impliquées, les conditions météorologiques, etc.

Les statistiques étaient révélatrices, et sans entrer dans les détails quelque 70 % des accidents avaient à l’origine une erreur humaine – et certaines régions du globe qui ne représentaient que 3 % du volume mondial, étaient responsables de 27 % de tous les accidents.

À partir de ces résultats, un bon nombre d’activités furent entreprises, en particulier :

Sensibiliser davantage les avionneurs, motoristes, ainsi que les aéroports, agences de navigation aérienne, et les gouvernements, sur leur part de responsabilité.

Revoir la formation des pilotes – avec une attention toute particulière sur leur travail en équipe, principalement au décollage et à l’atterrissage durant lesquels la majorité des accidents résultant d’erreurs humaines se produisent.

Développer des programmes d’amélioration des infrastructures aériennes pour les pays en voie de développement et faciliter leur financement. [Plus de 30 programmes de ce genre furent mis en œuvre dans les années qui suivirent.]

Afin d’améliorer la transparence de leurs opérations, je proposais que chaque ligne aérienne se soumette périodiquement à certaines vérifications techniques par une entité indépendante.

Les lignes aériennes étaient au début plutôt réticentes à adopter une telle mesure, mais elles furent prêtes à en discuter – et à l’accepter – sur une base volontaire à l’assemblée générale d’Amman en Jordanie en 1997.

Un nouveau phénomène avait fait son apparition. Il s’agissait des partages de codes qui s’étaient multipliés.

Les partages de codes permettent aux lignes aériennes de pénétrer de nouveaux marchés. Par contre, en accordant à un autre transporteur l’utilisation de son code, la détentrice assume l’entière responsabilité de la sécurité du vol opéré par son alliée.

La disponibilité d’une vérification technique objective commune à toutes les compagnies aériennes était devenue attrayante.

Elles acceptèrent aussi l’objectif de réduire de moitié le taux d’accidents aux cours des 10 prochaines années.

D’une association qui quelques années plus tôt considérait n’avoir aucune responsabilité en matière de sécurité, nous étions devenus une organisation qui en avait fait un objectif principal !


Le deuxième volet stratégique touchait les longues files d’attente dans les aéroports.

Les développements plus récents tels que la popularité croissante de l’Internet, la prolifération de l’usage des ordinateurs portatifs, le téléphone cellulaire, ainsi que les avancées en biométrie, offraient de nouvelles possibilités que nous devions explorer.

Un groupe d’intérêt commun fut constitué qui se composait de représentants de lignes aériennes, d’agences diverses, et de sociétés intéressées à développer et produire des équipements et des systèmes.

Le groupe – du nom de S.P.T. soit « Simplifying Passenger Travel » – accepta l’objectif de réduire éventuellement le temps d’attente aux aéroports de 50 %.

Les travaux furent malheureusement interrompus par les événements du 11 septembre qui avaient compliqué la situation.

Les travaux furent relancés par la suite par mon successeur sous le nom de « Simplifying Business ».

Parmi les réalisations les plus concrètes de cette stratégie on doit noter le billet électronique – la possibilité pour chacun d’entre nous de faire nos propres réservations par l’Internet ainsi que d’imprimer nos cartes d’embarquements.

Notons aussi l’usage de la biométrie en quelques endroits pour faciliter le passage aux douanes et à l’immigration.

Les problèmes de congestion étaient également présents au niveau du trafic aérien.

En période de pointe, la congestion de certains corridors aériens européens ainsi que nord-américains causait des retards dont le niveau était devenu intolérable.

On parlait sérieusement en certains milieux officiels d’imposer aux lignes aériennes une croissance zéro !

Compte tenu des efforts pour totalement libéraliser les marchés afin de stimuler la concurrence, restreindre la capacité des routes aériennes était de l’incohérence !

À très court terme, la situation demandait une plus grande collaboration entre les lignes aériennes et les agences de navigation.

L’IATA obtint l’accord d’établir une cellule opérationnelle de liaison au sein de l’Eurocontrol à Maastricht inaugurant – pour la première fois – une collaboration soutenue entre utilisateur et fournisseur d’espace aérien.

À plus long terme, il fallait des solutions beaucoup plus radicales puisqu’il était nécessaire d’envisager des solutions qui permettraient, au minimum, de doubler la capacité des routes aériennes.

La solution était à la fois politique – et technique.

L’espace aérien européen devait être unifié – et simplifié – et de nouvelles technologies développées et implantées.

L’IATA entreprit le développement d’une « Feuille de route » que nous allions proposer aux autorités responsables afin de guider le développement d’un nouveau concept de navigation aérienne.

Les programmes européens de « SESAR » et de « Ciel Unique – Single Sky », ainsi que le projet américain « NextGen », sont en partie dérivés des propositions émises à cette époque.


La question de l’impact de l’aviation sur l’environnement est aussi bien sûr importante.

Dans le court terme, l’IATA avait proposé aux lignes aériennes une série de mesures qui vissaient à optimiser la consommation de carburant et minimiser le bruit aux aéroports.

À plus long terme, des changements beaucoup plus radicaux seraient nécessaires.

Des nouveaux avions plus légers en matériaux « composites », des nouveaux moteurs plus performants, nous laissaient entrevoir la possibilité d’améliorer la consommation de carburant par passager de 15 à 20 %.

Améliorer le trajet des routes aériennes, diminuer les goulots d’étranglement dans les airs, pourraient résulter en un gain d’un autre 10 %.

Il n’était pas question à l’époque de biocarburant, ce qui devrait nous permettre d’augmenter notre réduction en CO2 un peu plus facilement.


Nous pouvons donc constater que les défis que nous avions identifiés à la fin du siècle dernier ont été largement maîtrisés, et même si ces défis existent toujours – et existeront peut-être toujours – leurs effets ne limitent pas la croissance de l’aviation.

En ce qui a trait à la réduction du taux d’accidents, l’objectif de 50 % fixé en 1997 fut atteint en 2007 – soit un accident pour un million six cent mille vols.

L’objectif a été également atteint aux aéroports, mais leur effet est malheureusement masqué par la congestion reliée à la sûreté.


La première décennie du nouveau siècle a été marquée, entre autres, par des attaques spectaculaires de terroristes kamikazes, par une importante crise du pétrole, une profonde récession économique qui perdure l’explosion des économies asiatiques – en particulier l’Inde et la Chine – ainsi qu’une plus grande prise de conscience à l’échelle mondiale de la nécessité de réduire notre impact sur l’environnement.

L’aviation commerciale est à nouveau en train de se redéfinir.

Sur la question de l’environnement, l’industrie s’est fixé l’objectif de contribution zéro pour 2025.

Puisqu’il est toujours prévu que le trafic aérien double dans les prochains 15 ans, afin de ne pas augmenter notre présent niveau de génération de gaz à effet de serre, nous devrons réduire nos émissions de 50 % par passager/kilomètre par rapport à aujourd’hui.

C’est un objectif très ambitieux qui demande que les nouveaux modèles d’avions et de moteurs soient beaucoup moins énergivores que ceux qu’ils remplaceront.

Les Airbus A-380 et A-350 ainsi que la nouvelle série de Boeing, B-787, devraient contribuer à cet objectif.

Il est peu probable que les deux grands avionneurs – Airbus et Boeing – décident de se lancer dans le développement d’une nouvelle génération de monocouloirs avant 2020.

Par contre, ces deux mêmes avionneurs étudient très sérieusement à ce moment précis l’option d’offrir une version modernisée de leur modèle présent – avec de nouveaux moteurs.

Le nouveau modèle de Bombardier, la Série C, peut faire une importante contribution en remplaçant les plus vieux A-320 et B-737.

Les progrès réalisés récemment dans la production et l’utilisation de biocarburant non – ou peu – polluants nous permettent d’espérer que d’ici dix ans quelque 20 % des vols seront effectués au moyen de ces carburants.


Les nouveaux concepts de navigation aérienne se doivent également de faire leur part.

SESAR, le projet européen, s’est fixé l’objectif de réduire d’au moins 10 % la consommation de carburant requise pour l’opération des vols dans l’espace européen.

SESAR a principalement pour objectif de tripler la capacité des routes aériennes – tout en améliorant la sécurité par un facteur de 10.

NextGen, le projet américain, s’est fixé des objectifs similaires.

J’ai indiqué précédemment, en référant au projet européen de « Single Sky », que le défi était autant politique, que technique.

Il est peut-être paradoxal que l’Europe, tout au moins celle de Schengen, ait aboli les frontières sur son sol – mais s’entête à les préserver dans les airs.

Les syndicats des contrôleurs aériens auraient-ils plus de poids que la police des frontières ?

Mais inévitablement le bon sens prévaudra.


La libéralisation des marchés a été progressive.

L’industrie des lignes aériennes n’a pas connu de « Big Bang » à l’instar d’autres industries ni n’a d’ailleurs été le sujet de discussions sérieuses à l’Organisation mondiale du commerce.
Elle avait débuté par l’ouverture totale des marchés à l’intérieur des Etats-Unis. Ce mouvement a été suivi par l’intégration du marché aérien dans l’espace européen et dans divers regroupements économiques régionaux.

L’initiative américaine d’Open Sky, qui est une forme de libéralisation extrême du bilatéral, s’est généralisée à plus d’une centaine d’accords entre pays.

La mondialisation du commerce, les réseaux électroniques qui favorisent les échanges instantanés entre les êtres humains, contribuent à l’émergence du village global et militent en faveur d’une libéralisation de plus en plus grande des marchés aériens.

Sous cette impulsion, le profil de l’industrie aérienne se transforme.

De nouveaux modèles ont émergé, d’autres se redéfinissent, et divers concepts s’affrontent.

Il est clair que l’ère des transporteurs nationaux est désormais révolue.

Peu de nations peuvent se permettre le luxe de subventionner une ligne aérienne incapable de faire face à la concurrence féroce qui sévit aujourd’hui dans cette industrie.

Les lignes qui offrent de très bas prix – celles que l’on appelle communément les « low costs » – se sont implantées dans les différentes régions du globe, exerçant de fortes pressions sur les lignes traditionnelles.

La rapidité – presque surprenante – avec laquelle les « low costs » se sont imposées a pris les lignes aériennes traditionnelles de court, et les a obligées à revoir leurs positionnements sur les marchés et à repenser leurs réseaux.

De fait, il appert que la totalité de la croissance mondiale en capacité depuis 2001 est effectivement égale à la croissance des « low costs » !

Sur cette même période, la capacité offerte par les lignes traditionnelles a légèrement diminué.

Une étude récemment publiée par le « Centre of Asia-Pacific Aviation » démontrait que pour la période en question le nombre de sièges offert par des « low costs » était passé de 7 % du total à 22 %.

Bien que beaucoup de nouveaux arrivants ont fait faillite à la fin de l’année dernière, près des 2/3 des compagnies créées depuis 2000 avaient survécu – ce qui représente 178 compagnies « low cost » en opération mondialement.

Il est paradoxal que la flambée soudaine du prix du pétrole ait quelque peu désavantagé ce nouveau type de lignes aériennes par rapport aux traditionnelles.

La raison en est très simple et résulte du fait que le coût du carburant représente un pourcentage beaucoup plus important de leurs coûts d’opération.

Par contre, les compagnies traditionnelles ont grandement souffert de la récession en raison d’une migration importante de leurs clients de classe affaires – vers la classe économique.

Sous la pression de la concurrence accrue – et prenant avantage des nouvelles flexibilités offertes par les marchés communs – un bon nombre de transporteurs sont à se regrouper pour survivre.

La situation est déjà réglée en Europe où, à toutes fins utiles, la plupart des anciens transporteurs nationaux vont se retrouver au sein d’un des trois groupes distincts dirigés respectivement par la Lufthansa, Air France, et la British Airways.

Déjà la Lufthansa a absorbé Swiss International (ancienne Swissair), Austrian Airlines, Brussels Airlines (dérivée de Sabena), et British Midland.

Air France ayant complété sa fusion avec la KLM possède également une participation importante dans Alitalia.

Quant à la British Airways – avec beaucoup de retard – elle est à compléter sa fusion avec Iberia.

Il reste bien sûr un certain nombre de plus petits transporteurs nationaux indépendants – mais il leur sera de plus en plus difficile de ne pas se fusionner à l’un ou l’autre des grands groupes.

En Amérique du nord, le même phénomène est présent et nous avons vu récemment Northwest et Delta se fusionner.

La question de l’avenir d’Air Canada demeure d’actualité.

Pourra-t-elle survivre sans se fusionner ?

Sera-t-elle suffisamment financièrement forte pour amorcer et diriger par exemple un regroupement nord-américain – lorsque les accords le permettraient ?


Il est plutôt curieux – sinon franchement paradoxal – que de nouveaux transporteurs que l’on pourrait qualifier de nationaux se développent et se taillent rapidement une place sur les marchés internationaux.

Au cours de la dernier décennie, trois petits états du Golf Persique ont créé d’ambitieuses plaques tournantes – ou « hub » – afin d’exploiter les marchés de 6e liberté entre l’Asie d’une part et l’Europe et l’Amérique d’autre part.

Emirates basée à Dubai, Etihad à partir d’Abu Dhabi, ainsi que Qatar Airways dont l’opération est à Doha se proposent d’exploiter des flottes importantes.

Pour fins d’illustration de leurs ambitions, il suffit de se rappeler qu’Emirates a commandé 53 Airbus A-380 et 70 Airbus A-350.

Pour sa part, Qatar Airways a récemment mis en commande 80 Airbus A-350 et cinq A-380.

Il sera intéressant de voir si, dans le contexte actuel, trois nouvelles lignes aériennes basée dans le Golf Persique pourront éventuellement survivre.

Et ce, particulièrement aussi dans le contexte de la croissance rapide de fortes lignes aériennes en Inde et en Chine, et de la disponibilité de nouveaux appareils à grand rayon d’action, tels que les Boeing B-787 et les Airbus
A-350 permettant les liaisons directes entre l’Asie, l’Europe, et l’Amérique du nord.

Tout cela nous promet un climat de concurrence qui sera sans doute des plus animés pour le très important marché asiatique.

Or en Asie, la croissance du trafic aérien est reparti de plus belle.

Cette région – l’Asie-Pacifique – vient de dépasser l’Amérique du nord en nombre de passagers annuels – 647 millions contre 638 millions pour 2009. D’ici quelques années, cette région représentera 50 % du trafic aérien mondial.


Finalement, faisant partie de la restructuration du transport aérien, nous avons observé aussi un essor important du nombre et de l’utilisation des avions privés et de sociétés, résultant sans doute en partie de l’accroissement de la rémunération des cadres supérieurs – un sujet d’actualité.

Par contre, il y a également nul doute que l’utilisation d’avions privés permet d’éviter la pagaïe – et les files d’attentes exaspérantes – occasionnées par les mesures additionnelles de sûreté aux aéroports.

La popularité de la formule de propriété partagée dite « fractional ownership » était en pleine croissance – avant la dernière récession.

La crise économique a interrompu cette expansion, mais il est à prévoir que cette formule va bientôt reprendre une vigoureuse croissance.


Que peut-on conclure de l’avenir de l’aviation commerciale – et plus particulièrement des services aériens – tels qu’ils se présentent aujourd’hui ?

En ce qui à trait à la demande, il est certain que le désir – et la nécessité – de voyager ne peuvent que continuer de croître.

La croissance sera vigoureuse en Asie-Pacifique, dans les républiques de l’ancien Empire soviétique, et en Amérique latine.

Il est à prévoir que l’Europe et l’Amérique du Nord (les Etats-Unis, le Canada, et le Mexique) concluront éventuellement un accord aérien en vue de créer un marché totalement intégré.

Cet accord devrait permettre la fusion de lignes européennes et nord-américaines.

En plusieurs régions du globe, les « low costs » atteindront une pénétration du marché de l’ordre de 50 %.

Les améliorations des systèmes de navigation aérienne issues de SESAR et de NexGen auront été en mesure de répondre à l’augmentation du nombre de vols.

Les biocarburants n’émettant pas – ou très peu – de CO2 seront devenus la norme pour les lignes aériennes.

La reprise économique devrait à nouveau stimuler la croissance du nombre d’avions privés, ainsi que de ceux opérés en copropriétés.

Les passagers auront la pleine capacité – non seulement de faire leurs propres réservations et d’émettre leurs cartes d’embarquements comme ils le font aujourd’hui – mais aussi de compléter eux-mêmes toutes les autres phases de leur voyage telles qu’enregistrer leurs bagages, ou procéder à leur propre embarquement.

Malheureusement, il est à craindre que les procédures de sûreté aux aéroports continueront de créer des embouteillages frustrants – empêtrées dans la bureaucratie, le manque d’innovation, et paralysées par la crainte de faire une erreur.


Enfin, il est paradoxal qu’une industrie comme celle-ci qui bénéfice depuis sa naissance d’un taux de croissance impressionnant – n’a jamais été rentable.

Malgré les avancées techniques spectaculaires – l’utilisation de procédures de fine pointe, d’accroissements de productivité exemplaires, ses efforts d’imagination, et sa constante remise en question depuis sa naissance – cette industrie a perdu plus d’argent qu’elle n’a fait de profits.

Le célèbre Warren Buffett, le gourou financier d’Omaha, se plaisait à dire :

« Si quelqu’un avait pris l’initiative d’abattre le premier vol des frères Wright, cette personne aurait rendu un grand service aux financiers qui ont cru faire une bonne affaire en investissant dans les lignes aériennes » !

Comme chacun sait, Warren Buffett vient d’investir une somme considérable dans un chemin de fer aux États-Unis.

L’industrie du transport aérien – serait-elle l’objet d’une malédiction pour la punir, tel Icare, d’avoir voulu s’élever dans les cieux réservés aux dieux de la mythologie ?

Ou souffre-t-elle encore d’une longue crise d’adolescence, vainement à la recherche d’une certaine maturité qui tarde à venir ?

Chose certaine – l’industrie du transport aérien continue de se transformer.

Le modèle d’affaires des lignes traditionnelles évolue, ainsi que les modèles d’affaires des nouveaux arrivants – les célèbres « low costs ».

Il est à souhaiter – et non pas uniquement pour les bailleurs de fonds – qu’il en résultera un nouvel équilibre, une certain stabilité, permettant à cette importante industrie d’atteindre un niveau raisonnable de rentabilité afin de continuer à apporter sa contribution essentielle au développement économique et social de l’humanité.

Merci !

Address to La Ligue de Cadets de l’Air – Souper Bénéfice

Brève Allocution pour le Souper Bénéfice La Ligue de Cadets de l’Air
Montréal, Canada, 24 Février, 2010  >>


Merci Monsieur le Président … pour cette introduction fort élogieuse.

En vous écoutant énumérer certains de mes faits d’armes … où des résultats qui me sont attribués … je me disais qu’il serait peut-être plus sage de vous dire simplement « merci »… et de m’asseoir … par crainte de vous décevoir !

Lorsque votre Président m’a demandé de prononcer quelques mots à ce dîner bénéfice … je me suis souvenu d’une anecdote qui date du temps … où les Romains avaient la mauvaise habitude … de faire dévorer des Chrétiens par des lions.

On raconte que l’un de ces Chrétiens avait réussi à échappé aux lions …

En évitant le lion qui se précipitait sur lui … le Chrétien avait murmuré quelques mots … dans l’oreille du fauve.

En entendait ces quelques mots … le lion s’arrêtait tout net … regarda la foule autour de l’arène … et tout penaud … retourna d’où il était venu.

On envoya un deuxième lion … et encore une fois … le Chrétien réussit à intimidé le lion qui décida de ne pas le dévorer.

On envoya un troisième lion … mais toujours avec le même résultat.

Le Chrétien fut gracié … car la coutume voulait … qu’après trois essais infructueux … le condamné aurait la vie sauvée.

I am told that this could be the origin of the expression … now currently used in baseball … “three strikes and you’re out!

L’Empereur Romain … très étonné … dit au Chrétien que celui-ci aurait la vie sauvée … mais qu’il aimerait bien savoir ce que le Chrétien à bien murmuré á l’oreille de chacun de ces lions.

« C’est bien simple » … répondit le Chrétien … « je leurs a dit … vous voyez toute cette foule qui vous regarde … après avoir mangé … ils vont certainement vous demander de prononcer un discours ! »

And so … I do understand that one is expected to sing for one’s supper.

However … let me reassure you … and as Henry the Eighth of England … was known to have said to each of his wives … “I do not intend to keep you very long!”


Permettez-moi … en tout premier lieu … d’exprimer mes sincères félicitations à la Ligue des Cadets de l’Air … et plus particulièrement à son Président … et à son Conseil d’administration … pour l’excellent travail que vous accomplissez.

En parlant du Conseil d’administration … je reconnais … avec plaisir … Chantal Boily … elle-même ancienne membre des Cadets de l’Air … comme sans doute plusieurs autres d’entrevous.

Chantal … qui j’ai bien connu à THALES Avionique … où elle occupe une importante poste de direction … à déjà … malgré son jeune âge … une feuille de route impressionnante … Elle a eu précédemment une poste important à Air Canada.

Chantal … tout comme votre Président Pierre Barabey … et bon nombre d’entrevous … témoigne de l’influence importante … que l’appartenance à la Ligue des Cadets de l’Air … peut avoir sur l’orientation de la formation des jeunes … et l’évolution de leurs carrières.

La Ligue des Cadets de l’Air ne peut pleinement remplir son rôle … que si elle reçoit le support de l’industrie.

Et à ce sujet je dois offrir … à tous et chacun d’entrevous … membre de l’industrie aérospatiale … ici présent … des félicitations chaleureuse … et des remerciements … pour l’aide essentielle que vous apportez à cette Ligue.

L’intérêt pour l’aéronautique a une longue tradition au Québec.

De fait … cette année marquera le 100ème anniversaire d’un événement important.

Il s’agit de la première rencontre internationale d’un group de personnes intéresser à l’aviation … il s’agit … plus exactement … du premier Congrès internationale de l’aviation qui se tenait ici même … au Québec … à un endroit qui est aujourd’hui un quartier de Pointe Claire.

Lors de la clôture de ce Congrès … soit le 2 juillet 1910 … a eu lieu un survol … pour la première fois … de la ville de Montréal pas un avion.

Il s’agit … d’un vol effectué par le Comte Jacques de Lesseps … au dessus de Montréal … dans un Blériot XI … qu’il avait amené par bateau … évidement … pour faire des vols de démonstration … en Amérique du Nord.

Jacques de Lesseps était le fils ainé … du non moins célèbre Ferdinand de Lesseps … le concepteur du Canal de Suez !

Il va sans dire que se premier vol avait créé beaucoup d’émoi chez les Montréalais !

Que de chemin parcouru en cent ans !

Et il est claire … que dès ces tout débuts … les gens de cette région … se sont passionnés pour l’aviation … et … grâce à cet intérêt soutenue … nous en sommes arrivés à la richesse … et la diversité des activités aérospatiale représenté ici même … ce soir.

Sans oublié … en passant … les contributions formidable de pionniers tel que Roméo Vachon … au développement de l’aviation de Brousse … au Canada … et qui nous ont valu une réputation mondialement.

Je n’ai pas besoin de vous rappeler … que cette région regroupe près de 60 pourcent de toute l’industrie Canadienne aérospatiale … et que Montréal … et ses alentours … est considéré comme un des trois pôles mondiaux de ce domaine.

Malgré la récession économique que nous connaissons et qui perdure encore … nous savons que l’avenir n’en demeure pas moins prometteur.

La croissance de notre industrie est certaine … et c’est à nous de nous assuré que nous continuerons à obtenir une part importance de cette croissance.

Pour cela … il nous faut préparer la relève .. continuer d’intéresser les jeunes à l’aéronautique et l’aérospatiale …et les inciter à se spécialiser dans l’une ou d’autre des professions … et compétences … qui seront requises … pour que nous puissions conserver notre leadership.

C’est là que vous … les membres influent de notre industrie … ont un rôle important à jouer … et votre support à la Ligue des Cadets de l’Air est un jalon significatif.

Finally, it is said that … no speech is entirely bad … if it is short … and I am afraid that I may already be in danger … of exceeding your level of tolerance.

Ce qui veut dire … qu’il est important d’arrêter de parler … avant que l’auditoire arrête d’écouter.

En terminant … je souhaite beaucoup de succès à la Ligue des Cadets de l’Air … et je souhaite également aux industries aérospatiales de notre région … de continuer d’innover … de croître … et de mériter un rôle de premier plan sur la scène mondiale.

À nouveau … merci pour votre aimable invitation … et bonne fin de soirée.

Le Conseil des Relations Internationales de Montréal – CORIM

Le Conseil des Relations Internationales de Montréal – CORIM
Presentation du Conférencier Raymond Benjamin
Montréal, Canada, 23 Février, 2010  >>


Mesdames … messieurs … j’ai le grand plaisir … de vous parler brièvement … de notre éminent conférencier d’aujourd’hui … le Secrétaire général de l’OACI … mon bon ami Raymond Benjamin.

Monsieur Benjamin à été élu à la tête de l’organisation de l’Aviation Civil Internationale … en août dernier.

Cette nomination venait couronner … une brillante carrière … de plus de quarante ans … et cela … malgré son jeune âge … au service de l’aviation civile.

Diplômée de l’Institut des Hautes Études Internationale … et de l’Institut d’Études Politiques … de Paris … il obtient … par la suite … une maîtrise de droit public … de la Faculté de droit et des sciences économiques de Paris.

Très rapidement …ont le retrouve … dans le rôle de conseiller … à la direction général de l’aviation civile française.

Il est demeuré depuis … entièrement fidèle à la cause de l’aviation civile … comme sa feuille de route … d’ailleurs le démontre … par les nombreuses fonctions qu’il a occupé … et les nombreuses responsabilités … dont il a été chargé … tant sur le plan Européen … qu’international.

Ayant fait ses débuts à la direction générale de l’aviation civile de France … la DGCA … dans divers rôles … incluant la négociation d’accords bilatéraux aériens … il est … en 1982 nommé … en qualité d’expert à la CEAC … la Conférence Européenne de l’Aviation Civile.

C’est à la CEAC que se déroulera la très grande partie de sa carrière … exception faite d’une période de 5 ans … de 1989 à 1994 … où il avait rejoint … pour une première fois les rangs de l’OACI.

Je crois que c’est d’ailleurs à cette époque là … que j’ai brièvement fait connaissance de Raymond Benjamin.

J’étais alors Directeur général de l’IATA … L’Association Internationale du Transport Aérienne … et Raymond Benjamin … était chargé de développer des politiques en matière de sureté … et d’élaborer des programmes de sureté pour les aéroports.

Il était aussi … entre autres … secrétaire d’un groupe d’experts de la détection des explosifs plastiques … et en feuilles. Monsieur Benjamin nous dira peut-être … si ce group inclus maintenant … les explosifs liquides dans les bobettes.

Par la suite … Reymond Benjamin à diriger la CEAC … pendant plus de 13 ans.

Cette Conférence Européenne de l’Aviation Civile … la CEAC … regroupe 42 états membres … et vise à harmoniser un certain nombre de politique et de stratégie dans l’ensemble de l’espace aérien.

Vous avez noté sans doute … que les responsabilités de la CEAC dépassent largement l’espace aérien de la communauté Européene.

S’est dans ce rôle que j’ai eu le plaisir de collaborer … à multiples reprises avec Raymond Benjamin … sur un bon nombre de questions d’intérêt commun à l’IATA et à la CEAC.

Il s’agissait … bien sûr de question de sureté … qui lui est chère … et d’environnement.

Deux sujets toujours d’actualité.

Raymond Benjamin est un homme d’action … son style et direct.

C‘est aussi un homme qui écoute … et qui sait naviguer parmi les multiples intérêts internationaux … qui se retrouve fréquemment à la gouverne des institutions onusienne.

En élisant Raymond Benjamin secrétaire général … l’OACI s’est offert un leader capable de donner à cette vénérable institution un nouveau souffle … et une nouvelle direction … que les défis que nous connaissons … lui impose.

Raymond Benjamin … né en Egypte de parents français … était sans doute … de par sa naissance … prédestiné à accomplir des tâches phara-onique !

Et réorienter l’OACI … est une tache de cette nature !

Mesdames … messieurs … je vous demande d’accueillir chaleureusement notre conférencier … le Secrétaire général de l’OACI … Raymond Benjamin.

Address to the 8th International Symposium of the International

FAV: Funding the Fight Against Pandemic Diseases
Closing dinner address to the 8th International Symposium of the International Consortium on Anti-Virals (ICAV)
Ajaccio, Corsica, October 5, 2009  >>


Thank you Mr. Chairman … for those kind words.

Good evening … ladies and gentlemen.

I am very much honoured … indeed … to have been asked to say a few words … on the occasion of this prestigious Gala dinner.

As I look around the room … it is obvious that … we have here the makings of a very successful evening … which … as you know … usually requires … a gathering of highly intelligent … well-educated people … engaged in fascinating conversation … and slightly drunk!

Well … we certainly have most of the required elements … and we can keep on working on that last condition!

Ladies and gentlemen … I am well aware that … no speech is entirely bad … if it is short … and I intend to be guided by this appropriate observation.

But I will not allow myself to be too restricted in words … when I express the great admiration I have … for each of you … eminent scientists … who have volunteered to join the fight … against the ever-present threat … of global pandemic diseases.

Your continued good work has already … and will continue … to save millions of lives … and despite my promise to be brief … I cannot say enough in praise … of your selflessness … generosity … and dedication to mankind … for which we are most deeply grateful..

The ICAV 8th international symposium … is being held … at a crucial moment … in the history of pandemics … and hopefully will show that progress is being made on several critical fronts.

The fact that HIV … is yet to have a truly successful vaccine after 25 years … and billions of dollars of research effort … certainly merits a review … on how to deal with this nasty virus in the future.

This naturally includes the development of future HIV therapies … whether vaccines or antivirals … as well as the important role of the community in addressing the needs of HIV infected people.

Most interesting … and worthwhile … was the session devoted … to the integration of all aspects of dengue research … to design innovative virus control strategies.

It was disturbing to be reminded … and I do hope that the government authorities are equally concerned … that classical response schemes … involving grant-funded research … massive and rapid diagnosis … clinical trials … patient care etc … are not suitable for a crisis situation of the magnitude … and speed of propagation … of the H1N1 type of pandemic.

ICAV’s identification of the gaps … and their proposals to bridge those gaps will … I am sure … go a long way in fighting the disease … as will the suggested improvements in surveillance … and predictive methods for human-to-human transmission.

Like most laymen … with only a rudimentary knowledge of your highly specialized field … I cannot pretend to understand much of the scientific progress … that you have achieved … and have been exchanging at this symposium.

In truth … you could well be wondering … what I … an aviation executive … am doing here … short of hobnobbing with some of the best scientific minds in the world.

Which in itself is certainly not unpleasant! … But let me briefly address the question.

Over the many … very many years … I have been involved with the aviation industry … earlier as President of an airline … then as the head of the International Air Transport Association … IATA … I often talked about the important economic and social contribution … that our industry has made to the world.

The contribution of aviation to international tourism was obvious … but beyond that .. the stimulation we brought to international trade was extensive … and generated much economic growth … and job creation.

Together … with the development of the current worldwide electronic communications network … we were bringing the world closer together … helping to create the Marshall McLuhan vision of the global village … promoting a better understanding … and appreciation … of our differences and cultures.

These are exciting … and worthy achievements … but there was another side to the coin.

Over the past few years … I came to realize … how the growth of international air travel has aided … and abetted … the worldwide spread of infectious viral diseases.

Unfortunately …for many of my colleagues … still today … and for the public and governments generally … it was a virtual elephant in the room … still largely invisible … despite an important wake-up call in 2003.

It was then … in 2003 … that SARS struck.

Spreading from mainland China … to all corners of the world in a matter of weeks … the SARS epidemic shocked the world …causing global damage estimated at 300 billion dollars … and driving my industry into yet another financial crisis.

SARS was forewarning us … of the disastrous social and economic consequences … of a more serious and widespread pandemic … but not many were listening!

Almost every country in the world … now enjoys international airline service … such that any point of the world … can be reached in less than a day. … This vast network can allow pandemic infections … to circle the globe … in a matter of hours.

The world’s airlines carry approximately two and a half billion passengers a year … that is a lot of opportunities for transmitting diseases.

I am told that infectious diseases already kill some 17 million people a year worldwide … but this is nothing compared to the devastation … that a serious pandemic would cause today.

ICAV … as you well know … was founded after the model developed by Canadian scientists … in response to the SARS crisis.

It is a unique and innovative model … of international scientific collaboration.

But … like many good causes … it suffers from lack of funds.

The first stage of therapies development – … the discovery of new promising antivirals – … is largely … if not completely supported by grants obtained by you … ICAV-affiliated researchers.

The latter stages … when commercialization is anticipated … can be supported by the pharmaceutical companies.

But the critical stages … of pre-clinical and clinical trials … receive little public or industry funding. … This is where we … of the Foundation on Antivirals (FAV) … are to come in.

From conception to realization … FAV took more than a year and a half …

Conceived in late 2007 … FAV received its charitable status from the Government of Canada in February of this year … and … I’m pleased to report … that with a contribution from the Government of Québec and Montréal International … we were able to establish the international secretariat in Montréal … as of last May.

As the founding Chairman of this new international Foundation … I was very pleased to welcome Monsieur Jacques Chirac … former President of France … and the Right Honourable Jean Chrétien … former Prime Minister of Canada … who have both agreed to be Honorary Patrons.

Our prestigious Board of Directors includes two gentlemen you already know … Jocelyn Beaudoin … who is president and CEO of FAV … and Michel Chrétien …who is FAV’s Scientific Director … and of course a co-founder of ICAV.

David Hill … a distinguished lawyer, and Pierre McCann … a senior CIBC Executive … serve as Secretary and Treasurer of the Foundation.

Other Directors include Ronald Allen … retired Chairman and CEO of Delta Airlines … Jean-Claude Baumgarten …President and CEO of the World Travel and Tourism Council … and Jeremy Carver … whom of course you know as the co-founder and president of ICAV.

Another airline colleague … Ali Ghandour … former President and CEO of Royal Jordanian Airlines … is also on the Board … as are Peter Harbison … Executive President of the Centre for Asia-Pacific Aviation – Australia … Urban Joseph … retired Vice-Chairman of the Toronto-Dominion Bank … the Honourable Michael Meighen … a member of the Canadian Senate … and Alain Mérieux … President of the Fondation Mérieux – France.

All in all … we have built a prestigious network of influential … high-profile personalities … who are all committed to promoting the Foundation around the world … and to the achievement of its financial goals … so essential to reaching our common humanitarian objectives.

To increase the international visibility of our cause … we need to persuade
more people of “influence and affluence” … to join the list of our Honorary Patrons … Board members … and Governors.

My friend Ali Ghandour … who is a former advisor to his Majesty the late King Hussein of Jordan … has already agreed to approach a very important Middle-East personality about becoming an honorary patron of FAV … and so increase our presence in this region.

We’ll need your help … in identifying and recruiting … high-profile ambassadors from your respective regions and countries …who are well positioned to help solicit substantial donations … and/or … to make generous personal gifts.

It would also be invaluable to have your support …and on occasion your participation … in FAV’s efforts to solicit the major international corporations … and government decision makers … headquartered within your respective borders.

Based on a preliminary study of potential donors … the goal for our first campaign is $100 million by March 31 … 2015.

However … the Foundation’s official launch will not take place until next spring. … By then we hope to be in a position to announce … that a significant portion of this initial fundraising target has been raised … or pledged.

Our strategy is to concentrate … in this first year … on major international corporations present in Canada … and then to rapidly expand our fundraising efforts to the United States … Europe … the Middle East and the Asia-Pacific region.

Funds raised by FAV will be allocated by the Board … on the basis of a recommendation from its Scientific Committee … based … of course … on a specific proposal from ICAV’s Scientific Committee.

Regular progress reports … charting results … will be presented to the FAV Board … and shared with our donors.

Our objective is to contribute to the development of at least one new antiviral therapy every five years.

Donors will be publicly recognized in a variety of ways – … through publications … galas … special events … and so on.

Donors of one million dollars or more … or those instrumental in raising this amount … will be recognized as “Governors.” … The first ten will be recognized as “Founding Governors.”

Our initial approach to fund raising is traditional … in that it targets major corporations, … Perhaps also slightly innovative … in so far as it will focus on those corporations which could themselves be agents of propagation by the nature of their geographically wide-spread activities.

Our next fund raising efforts … will fall into the category of real innovative financing … of the type that was described in the first session on Saturday morning.

As Dr. Douste – Blazy pointed out in his remarks … traditional sources of funding have proven to be clearly insufficient … to achieve the health-related Milennium goals.

The plan to expand UNITAID Millennium financing … from a tax on airline tickets to focus on the travel trade as a whole … in fact … arose from my initial discussion with Dr. Douste-Blazy.

I made this suggestion in the spirit of complementarity which I felt was evident between our two activities. … We develop new therapies for the developing world … and UNITAID/Millennium distributes them.

Since we both intend to rely on innovative fund-raising strategies involving the travel and tourism industry … it could be beneficial to join our efforts … and we have held some preliminary discussions to that effect.

The tourism industry has already suffered much from virus-caused pandemics … and has a lot to lose … and conversely much to gain from the development of successful antiviral therapies..

Tourism is concerned. … This was echoed recently by many media … including the FIGARO … which on the 22nd of September stated “La grippe A enrage le tourisme! “ Some seventy-five travel agents had gone bankrupt in the first half of this year in France alone … in part as a result of decreases in tourism that were virus-related.

Ladies and gentlemen … we need to remind our fellow citizens that epidemics have come close to wiping out mankind … since the beginning of recorded history.

As early as 430 BC … typhoid killed a quarter of the population of Athens over four years.

From about 540 AD … the Plague of Justinian … or bubonic plague …went on to eliminate half the human population of the known world – … though it spared Justinian himself who was infected … but survived!

The Black Death … which started in the 1300s … killed 75 million people … including half of England’s population.

Since 1816 … cholera has caused seven pandemics … the latest in the mid-sixties.

Epidemics have killed entire indigenous populations. … Up to 95% of the Native American population of the New World … was killed by Old World infectious diseases such as smallpox, measles and influenza.

We have been reminded that not every segment of the population is affected in the same way. … This spring … influenza hit Canada’s Haida … and other native communities … first and deepest … and it could well get much worse.

Almost all of these diseases … as well as typhus … tuberculosis … leprosy … malaria … yellow fever … and … more recently … SARS … are still around.

To this day … smallpox is the only human infectious disease to have been completely eradicated.

The world seems to suffer from generational amnesia … and needs a strong and loud wakeup call!

Modern science may have reduced the impact of infectious diseases on local populations … but modern travel has extended their range… and the rapidity with which they spread.

Our rapid … and extensive scientific advances … have indeed given us a false sense of security. … Mankind is still very vulnerable to a massive bacterial or viral attack!

Regretfully … the developed world is still too insensitive to the plight of the developing regions of the world … as if they lived on a different planet!

We are shocked about the death of a few people in Western Europe or North America … but disinterested about half a million deaths in Africa.

AIDS could kill 31 million people in India … and 18 million in China by 2025.

The AIDS death toll in Africa may reach 90-100 million by 2025.

Equally worrisome for the future … are antibiotic-resistant “superbugs” … which may contribute to the re-emergence of diseases … which had been well controlled … such as tuberculosis.

Over-reliance on antibiotics is a factor in the re-emergence … and it raises a similar issue … with respect to the amount of government money going to the development of vaccines … versus antiviral therapies … which are effective even in the treatment of new viruses such as H1N1.

Three very important infectious diseases now receiving antiviral attention from ICAV – … H1N1 influenza … dengue fever … and HIV/AIDS … have the potential to do a lot of damage.

Assuming a pandemic as severe as that of 1918 … 71 million people could die from H1N1 influenza.

And then there are already 50 million reported cases worldwide of dengue fever.

The disease killed 20,000 people in 2008 … and over 2.5 billion are at risk … mostly children and adolescents.

Ladies and gentlemen … there is a lot of difficult work for you … to do in the years ahead.

As Plutarch wrote 2,000 years ago … “Research is the art of going up alleys … to see if they are blind.”

Research is painful … frustrating … often exasperating … and requires taking risks. … One needs patience … determination … dedication … and you have those great qualities.

With much of your research being funded by government grants … there will no doubt be a need to raise the profile of our worthy cause with governmentl authorities … and minimize the invariably creeping paralysis … too often associated with the bureaucratic process!

Looking ten years down the road … FAV’s vision is to be recognized as the “premier” international Foundation … dedicated to the development of antiviral therapies.

We can only deliver this … of course … through our close affiliation with ICAV … and as a result of ICAV’s increasingly successful identification of promising new therapies.

Ladies and gentlemen … some seventy years ago … Antoine de St. Exupery … an aviation pioneer and a great humanist … disappeared over the Mediterranean … on a flight from Corsica to Marseille.

In his famous book “The Little Prince” … one of the characters observes … “What is essential in life … is often invisible to the eye”. … Let me add … “it is the caring for mankind which makes your contribution so special.”

FAV is very proud to share with each of you … and ICAV … the objective of developing successful … and cost effective … new antiviral therapies … by harvesting the best ideas … from the best minds … for the benefit of all mankind.

Thank you.

Opening address to the 17th World Air Transport Forum

World Air Transport: The future is not what it used to be
Opening Address to the 17th World Air Transport Forum
Paris, October 29–31, 2008  >>


Good morning ladies and gentlemen,
A very warm welcome to the 2008 World Air Transport Forum … which … exceptionally … is being held in Paris this year.

A no less prestigious location … you would agree … and at least equally renowned for its gastronomy.

Holding the World Air Transport Forum in Paris is not a diversion … to make you forget … that last year … we were predicting … with confidence … that the airline industry would achieve a profit of five to six billion US dollars in 2008.

Now … if we are to believe the most recent IATA forecast … which was issued in September 2008 … we would be looking at a loss of 5.2 billion dollars.

In retrospect … the number was correct … it was simply the sign preceding that number that was reversed!

No sooner are the fuel prices giving an indication of returning to a more reasonable level … than the spectre of a worldwide recession … now stands to deny the airlines … any chances of financial recovery.

Over the past nine months … the dramatic increase in the cost of fuel … has caused air fares to increase rapidly … reaching a level such that … for the first time … demand was becoming suppressed.

In many markets … this led to a corresponding reduction in the number of price-sensitive travellers.

It is now clear … that the bubble of bargain air travel has burst … and now … of course … economic uncertainty has dampened business travel.

This year … global passenger traffic has slowed down markedly … domestic traffic fell everywhere … and the largest domestic market … the North American market … was hit the hardest.

With revenues dropping as quickly as costs were rising … the convergence of those factors … caused some of the U.S. airline CEOs at the last IATA AGM … in Istanbul … to describe the situation as … “A Perfect Storm”.

But as if that was not bad enough … the situation was soon to deteriorate much further.

And to summarize: … the rapid … and dramatic … “meltdown” of a number of major U.S. financial institutions … accelerated a “Tsunami” … literally devastating the credit markets.

Public confidence was totally shattered … and the U.S. economy reached a very critical juncture.

The vigorous intervention by the U.S. Congress and the Treasury to engineer a massive bailing out … first of some large financial institutions … considered “too big to fail” … and later extended to the entire U.S. financial system … was not able to bring about some stability.

It now remains to be seen … whether the concerted intervention of all major central banks in North America … Europe ….. even in Asia … and of their governments … will truly succeed in calming the markets … and bring back some sanity.

Hopefully … all of this should have signalled the “beginning of the end” … rather than merely the “end of the beginning” … But this was before we began to slide into a recession!

Even before the current deterioration of the economy … thus far this year … almost all U.S. carriers … legacy and low-cost … had lost money.

Their losses were acerbated by a weak U.S. dollar … old and relatively fuel-inefficient fleets … poor balance sheets … and faltering consolidation efforts.

All the major U.S. carriers had announced substantial capacity cutbacks … taking advantage of the crisis … to ground many of their older aircraft.

The low-costs were more particularly affected … by the rapid rise in the price of fuel.

Always the largest portion … fuel costs … went from 40 percent … to 50 percent … of their operating costs … compared to an increase from the 20 percent range to approximately 35 percent for network carriers.

Less affected by traditional legacy carrier problems … Jet Blue for instance … and others … still gained market share … but they nevertheless shaved down their expansion … by deferring delivery of new aircraft.

As always … airlines tend to order new aircraft at the top of the economic cycle … and take delivery at the bottom.

The mainline European carriers … less affected by fuel increases because of the strong euro … and most having hedged a large proportion of their anticipated fuel needs for 2008 … were still making money … and had not dramatically reduced capacity.

The big three … Air France/KLM … Lufthansa/Swiss … and British Airways/Iberia … had announced slowdowns in their expansion rates … but had yet to consider capacity cut-backs … as of a few weeks ago..

The European low-costs are responding less well to the cost challenge.

Easy Jet and Air Berlin are both losing money. … The former is reducing its rate of capacity growth … and the latter has embarked on a major cost reduction program.

The shocker … of course … is Ryanair … which appears to be headed for a full-year loss … because of un-hedged fuel … massive write-downs on its investment in Aer Lingus and … said Mr. O’Leary in July …“plummeting consumer confidence in the UK and Ireland.”

The situation is also very difficult on the Indian sub-continent … where the airlines could lose as much as 1.5 billion dollars this year.

The high cost of fuel … aggravating general inflationary trends … coupled with extensive price wars … resulting from excess capacity … will force re-structuring.

As the market growth is now slowing down considerably … capacity is now being cut back … and consolidation is likely to accelerate.

Elsewhere in the world … airline executives … although increasingly cautious … were not convinced that they were facing a major crisis.

Perhaps this is because … the structure of the world economy has changed considerably … since the last financial crisis.

Rapidly growing Asian economies … have increased their internal and inter-Asia trade … and are now less dependent on the U.S. economy.

China … India … and other Asian nations … as well as the Middle East … particularly the Gulf States … were still expanding aggressively … and so were their airlines.

Over the past two years … an unprecedented number of new aircraft have been ordered …from both Boeing and Airbus … by the so-called “BRIC” economies – … Brazil, Russia, India and China … – where air traffic had been growing in double digits.

No sooner had the fuel crisis given signs of abating somewhat … than growth … rather than replacement … become once again the order of the day for these airlines.

Emirates … for example … announced in August that if oil prices fell to $105 per barrel … the airline would launch services to Durban … Algiers … Amsterdam … Kiev …Barcelona … and Buenos Aires.

As we look ahead … and try to anticipate the performance of our industry … there are a few pertinent questions still to be answered … For instance …

Do we have now … total visibility on the state of the bad debts crippling the U.S. financial institutions … and on the amounts exported from there … to the non-U.S. institutions?

Have the actions taken by the various governments … national and international banks … been sufficient to restore liquidity and rebuild public confidence?

Warren Buffet … the well-known financial guru … still expresses deep concern … regarding derivative financial products.

And finally

Given the credit crunch … and its associated loss of appetite for risks … and the slowing down of worldwide growth … not to mention the recession …

Can we still justify … and finance … the huge numbers of aircraft we have ordered … in the past two years?

Obviously … the storm is far from over … and for all airlines the crisis is very serious.

To borrow from Mr. de la Fontaine …

“Ils n’en mourraient pas tous … mais tous étaient atteint ». (les animaux malades de la peste).


As an eternal optimist … I keep looking for silver linings behind those dark storm clouds.

One of those silver linings is actually green.

It’s our industry’s determination … now well documented … to take our environmental responsibilities seriously.

Flying green was the theme of this Forum last year.

Our objective was to raise awareness of the environmental issues facing our industry … and I believe that everyone would agree … that this industry is now fully aware of its environmental responsibilities.

IATA followed up its vision statement … of a carbon-free industry within 50 years … with a hopeful expectation … that the industry will at least be “carbon-neutral” – meaning continued traffic growth without any emissions increase – by about 2020.

ICAO committed to “aggressive action” on aircraft emissions … and in their customary fashion … created a new group of senior government officials … to formulate an “implementation framework.”

At Farnborough … everyone … and everything was green.

There were green flags everywhere.

So today … the environment is no longer at the top of our forum’s agenda … because it is now on everyone’s agenda.

While environmental pressure on airlines … has yet to reach European proportions in other parts of the world … carriers everywhere are working … to build environmental initiatives into their core strategies.

Some of our critics were quick to accuse us of “green-washing” … in other words … trying to make ourselves look more environmentally friendly … than we really are.

But it’s not just good PR.

Like other big business … we see potential profits in flying green … by appealing to more green travellers … by saving on fuel … and by attracting more capital … from environmentally-conscious investors.

To say nothing of the goodwill being generated … by being good corporate citizens.

One of our speakers at last year’s conference … warned us … that any airline that does not have a strategy to address environmental issues … might even find itself unable to get financing.

And this was even before the “credit crunch”!

The tourism sector is certainly cashing in on green travel.

Eco-tourism is growing at three times the rate … of the mainstream travel market.

Nine out of ten of the tourists surveyed … say they prefer tourism … that shows concern about the natural environment.

In the Asia-Pacific region alone … well over a hundred hotel … resort … and visitor complexes … are now certified by the industry’s Green Globe program.

For tourism … green may be the new gold!


The world’s attention … including that of our industry … is now on Greenland … fittingly enough.

Its melting glaciers … have become a focal point … for world concern about climate change.

Delegations of politicians … and industry leaders make pilgrimages to Illulissat … to see the glacier melting before their very eyes.

They have to change places at Hangerlussuaq … however … because the glacier there is inconveniently growing . . .

That wasn’t meant to chill your commitment to flying green.

Rather … it was to remind us … that the evidence of global warming is not all consistent.

Nor is it fully understood.


Drastic and hurried solutions … to problems we are only beginning to understand … can create more harm than good.

Biofuels are a case in point.

The rush to turn plants into energy … is compounding a third world food crisis.

We now realize that any new generation of biofuels must not compete with food crops … for land use.

I do not think that we want to be perceived … as taking food out of the mouths of underprivileged babies … in order to fuel our airplanes.

Last year … at this forum in Cannes … I suggested that algae were probably the most likely … and least damaging source of biofuel.

Some 35,000 square kilometres of algae farming … could produce enough biofuel to totally replace jet fuel … whereas it would take six million square kilometres … an area the size of Europe … to do the job with soybeans.

Airbus and Honeywell … in cooperation with JetBlue and International Aero Engines … are developing a process to produce jet fuel from algae-based oils … that could provide up to 30% of all commercial aviation needs by 2030.

Air France-KLM are in a pilot project with a Dutch technology company … that produces algae on a large scale.

Such industry initiatives deserve to be encouraged.

Carbon trading is … in my opinion … another example of a hurried response to the greenhouse gas problem.

Buying permits to emit … can only be an interim solution … and could detract from the real objective!

Lets face it … carbon trading is passing the buck among the players.

Getting rid of carbon emissions is where the buck stops.

I am pleased … and somehow gratified … by how much our industry has accomplished already.

Every day brings announcements of new achievements.

The fuel-efficiency improvements promised by the Airbus A-380 now a reality – … and hopefully soon the Boeing 787 … and the Airbus A-350XW … will also meet expectations.

Airlines are pushing airframe manufacturers to launch new narrow bodies … that are at least 15% more efficient than the current generation. … But that will have to wait to the 2020’s.

In the meantime … the manufacturers are constantly coming up with aerodynamic tweaks and low-drag packages … designed to improve the fuel efficiency of aircraft currently… in … or just coming into service.

The engine world … is pursuing the development of geared turbofans … and un-ducted fans … all aiming for that 15% fuel improvement target.

Rolls-Royce and General Electric are also talking about developing an engine for natural gas-powered aircraft.

This followed an announcement by state-owned Qatar Airways … that it aimed to become the first carrier in the world to fuel its fleet with natural gas.

Not surprising! … The Emirates hold more than 15% of the world’s proven natural gas reserves.

In July … Boeing reported that United … Air New Zealand and Japan Airlines … had completed 57 flights using continuous descent approaches (CDA) rather than a series of level segments … resulting in a 40% decrease in fuel consumption … during descent.

SAS completed Europe’s first ever transatlantic “green approach” last December … and has been collecting data on some 1,300 CDA flights since then.

However … ATC congestion remains a significant complication in achieving the potential fuel savings.

Streamlining air traffic management … through the Single European Sky (SESAR) initiative … an efficiently coordinated and integrated ATC operation … could deliver significant reductions in CO2 emissions.

The same could be said of implementation of the Next Generation Air Transportation Systems (NextGen) in the U.S.

Unfortunately, governments are still dragging their feet in this area.

In June … ICAO launched its Web-based Carbon Calculator tool.

This gives airline passengers … an unbiased and transparent first-order assessment of CO2 emissions… for a given flight between city pairs … for use in carbon offsetting programs.

For its part … IATA is developing an electronic ticket … that will have room for an environmental fee or pledge.

It should be in place by next year.

Although I’m lukewarm on carbon trading … I believe carbon offsetting projects can make a significant contribution in reducing our carbon footprint.

Constructing wind farms … or buying solar panels … for a village that formerly burned kerosene for its energy … may not have the dramatic impact of reforesting the Sahel . . . but such projects all have the merit of reducing CO2 emissions.

And thus … with some notable exceptions … the air transport industry as a whole seems determined … and dedicated … to making concrete progress in reducing its carbon footprint.


Not to belabour the argument … the EU’s insistence on a rapid conclusion of Phase II … for example … could undermine the most significant development for global air travel in the last decade.

I am referring … of course … to Phase I of the new “open skies” agreement between the United States and Europe.

As it stands … the agreement is truly a “silver lining” in many ways.

All those cumbersome bilateral agreements signed over the years between the U.S. … and European countries … have been replaced by one agreement covering all 27 members of the Union.

Any airline from the EU will be able to fly … unrestricted … from any city on the Continent to any American airport.

The log jam on Heathrow is unlocked.

The most coveted airport in Europe … no longer restricts London-U.S. flights to two British and two American carriers.

Air France/KLM became the first European carrier to take advantage of the liberalization with … on April 1 … a new flight from London to Los Angeles.

Despite the shaky condition of the U.S. economy … threatening to further dampen demand … European and U.S. airlines are preparing to launch a wave of additional flights … in response to the new open skies agreement.

British Airways having bought L’Avion … has now launched a new subsidiary … appropriately named OpenSkies … to operate Boeing 737s from Paris and Brussels to New York.

The first route was inaugurated in June … and the second is to start up soon.

New transatlantic routes … between points previously unserved … and increased competition on those already well served … should bring down airfares … or at least prevent them from being raised excessively.

The parties also agreed to rapidly conclude Phase II … which includes the sensitive issues of foreign investment limits in U.S. carriers … and cabotage rights.

A positive step in this direction was taken in Phase I … with the recognition of acquired rights of airlines … (landing rights … slots … access to routes …etc.) … from different countries after they merge … or after one buys another.

When … and whether … Phase II is completed … will depend on the economy and the health of the U.S. airline industry … and nothing will happen until the new administration is fully in place.

Jeffrey Shane … the former U.S. Undersecretary for Transportation Policy … and other speakers … will have a lot to say about this watershed development in our afternoon session.

Ten years ago …I suggested that a “big bang” solution to worldwide liberalization was most unlikely.

The way to go … was the continued expansion of regional common air markets … such as has been achieved by the EU … and the pursuit of bilateral agreements between the regional areas . . . or “block-lateralism,” … to use an expression I coined at that time.

Hopefully … this first block-lateral agreement … which has now taken place … will encourage other regional common air market agreements … by like-minded nations in Asia … in Latin America … and elsewhere.

Combined with increased market access of the low-costs … over the past two decades … the accord’s flexible arrangements … if emulated elsewhere … will open endless opportunities for the expansion of business … trade … and tourism … around the world.


Our industry structure is continuing to evolve to cope with … the persistently turbulent skies of commercial aviation … and new consumer demands.

One of the most remarkable developments of the last decade … is the emergence of the Gulf States … as the new hubs for international air travel between East and West.

Recently … Dubai Airport caught up with Singapore in passenger traffic volume.

The Gulf airports have to meet the needs … of the rapidly expanding Emirates Airline … with almost sixty A380s arriving over the next five years … as well as the expansion of Etihad … Qatar Airways … GulfAir … and others!

The almost adjoining airports of Dubai … Jebel Ali … Sharjah … Doha … Bahrain … and Muscat … will together … by 2012 … offer an annual capacity of over 300 million passengers.

Three hundred million! … That’s just short of a million passengers per day … and all from elsewhere.

Talk about reshaping the industry.

But some wonder whether this huge wager will pay off.

The trend is still in favour of non-stop … long-range service … from any major city in the world … to any other.

Why go through Dubai if you don’t have to … other than because the city is becoming a glamorous playground for the rich … richer … and richest.

The shape of things to come … among mainline carriers in Europe …is pretty well determined by the so far successful “big three” mergers.

Air France/KLM … Lufthansa/Swiss … and now … after a bumpy courtship … British Airways/Iberia … will dominate the European scene.

Alitalia will end up in one of the “big three” … even Prime Minister Berlusconi has now realized … that he cannot escape the inevitable.

Still largely undetermined … is the fate of the smaller European carriers … yet to find a role in a rapidly changing industry … being buffeted by volatile fuel prices … overcapacity … and an economy sliding into recession.

Finnair’s profits are down. … SAS earnings have slumped badly … and the group plan to unload Spanair ASAP.

British Midlands (BMI) is likely to be acquired by Lufthansa. … That is almost a foregone conclusion.

BMI controls over 11% of the slots in Heathrow … worth … incidentally … about $10 million to $40 million a pair for the peak morning time.

The slots are probably worth more than the airline.

Austrian Airlines is on the market for a big brother … to help determine its future … as are Czech … and JAT.

They should find buyers. … Despite current difficulties … the markets of Eastern Europe are looking increasingly attractive in the long term.

In the U.S. … a bid by Delta and Northwest … to form the world’s largest airline… is about to become a “fait accompli” … despite substantial discontent by the Northwest pilots.

The merger could be eclipsed by the potential larger pairing of Continental and United.

American Airlines is also making noise about a merger with US Airways … despite reports that its merger with America West has led to poor service … low morale … squabbling workers … and a very significant drop in stock price.

But one should remember that size does not guarantee survival.

If this had been the case … Eastern Airlines and Pan Am would still be around today.

Even consolidations of that magnitude … may not streamline the U.S. industry enough to snap it out of its downward spiral.

The potential mergers seem to offer little opportunity … for the level of capacity reduction still required.

There is almost no overlap between the Delta and Northwest networks … for example.

The excess capacity in southeast Asia and India … caused by the recent proliferation of low-cost carriers … has led to rampant price wars.

The situation is unsustainable … and will lead to more consolidation … and mergers … within a year or two … India is particularly vulnerable.

Although China’s airlines are still reaping the benefits of a rapidly growing economy … and don’t feel threatened to the same extent … by the “slowdown” in international markets … there is some pressure for consolidation.

Air China … for example … is looking for greater access to the country’s biggest city … by taking over second-level carrier Shanghai Airlines.

This could be a big step toward creating the balanced … nationwide operator … that China still lacks in any of its big-three airlines.

To return to the liberalisation of the Atlantic air market … the sea changes being brought about by the U.S.-EU agreement … include stronger commercial alliances … and even joint ventures within those alliances.

We have there … clearly … the seeds of potential transatlantic mergers … if and when they would become allowed in Phase II.

Air France initiated the first big Open Skies joint venture late last year by proposing that they … and Delta Airlines … merge their long-haul North Atlantic routes.

In June … Continental announced it would join Star Alliance partners Lufthansa … Air Canada … and United … in a now antitrust-immunized venture … that coordinates flight schedules … capacity … fares and services … and pools revenues on transatlantic flights.

In earlier days … pool agreements on the Atlantic and elsewhere were the norm. … Plus ça change . . .

Not to be outdone … in August … American Airlines and British Airways (with Iberia) signed a potential joint venture agreement … for flights between North America and Europe.

The last time they tried … in 2002 … U.S. regulators demanded that the two carriers hand over to competitors … enough slots for 16 daily departures at Heathrow.

This … incidentally … was a number equal to the whole of American’s operations at the airport.

Now that Heathrow is fully open to all EU and U.S. airlines … such concessions should no longer be required.

Many of the new services resulting from this “liberation of the Atlantic” … are aimed squarely at the business market.

L’Avion … which British Airways bought … and fused with its OpenSkies subsidiary … offers business class-only flights between Paris and New York.

BA has ordered two Airbus A318s … configured for 32 business class seats convertible to lie-flat beds … for a twice-daily London City-New York service beginning next year.

Virgin announced in June … that it plans to acquire 15 new planes … for business class only flights to New York and … eventually …to other U.S. cities from London … Paris … Amsterdam … Frankfurt … Milan … and Zurich.

Timeframe is the next 12 to 18 months.

Singapore Airlines plans to convert five A340-500s to a 100-seat… all-business class configuration … and offer daily service to New York and Los Angeles.

Lufthansa is also considering expanding its all-business class service … which presently uses two Airbus A319s … and one Boeing 737.

Why would these larger airlines remain convinced that a market for such service exists … when three business class-only pioneers … MAXjet … Silverjet … and EOS … have failed?

And this despite the weakening economy … and an already significant decline in premium demand … in some markets?

Well of course … the start-ups could not offer … the back-up convenience of an extensive network … and a frequent flyer program … to say nothing of the fact that they were operating out of secondary airports.

In 1971 … Southwest initiated a daring business new model …a no-frills … one-class service … operating one aircraft type … out of cheaper second-tier airports.

Surprisingly … Southwest has now decided to introduce business class into its business model … expand service to major airports … offer more frills and benefits … etc.

The airline believes the modified model will deliver $100 million a year … but it has muddied a clear fundamental formula that has delivered great results for 37 years.

Will the change be successful?


Another low-cost business model change that’s on the rise … is going long-haul.

Air Berlin went that route in May … when it launched services to Beijing and Shanghai.

But it is in Asia-Pacific skies … that the spirit of Sir Freddie Laker really soars.

Since October 2006 … Oasis Hong Kong Airlines… has been offering a two-class … full-service operation on the Hong Kong-Gatwick route …and since July last year … six weekly flights between Hong Kong and Vancouver.

In May … after just five months of operation … Kuala Lumpur-based AirAsia … had already sold 100,000 seats on its two routes to Australia and the Chinese city of Hangzhou.

The airline plans on an eventual network of some 77 long-haul destinations.

Will these ambitious plans succeed?

Many hurdles need to be overcome for successful long-haul operations … such as complex international regulations … the need to provide costly amenities … like real food … more expensive airports … longer turnaround times … etc.

This will require a significant departure from the successful low-cost model.

The ultimate in convenience … of course … is business class “on demand” in a private jet.

This business model has existed for some time … in the form of time-sharing aircraft operated by Netjets … Bombardier Skyjet International … Flexjet … and others.

Instead of owning the aircraft … you buy any number of return trips … but on a per plane basis … not on a per seat basis.

Lufthansa Private Jet (LRJ) has gone one step further … by recently acquiring a dedicated fleet of Cessna Citations … and Bombardier CPJ200s … all with tailored livery and 12-seat VIP interiors … which are … or will be … available 24 hours a day … 7 days a week.

DayJet … which began operations in Florida last December … goes still further … by offering “per-seat on-demand” private jet service.

Customers reserve online … telling the airline where they want to go … when … and how far in advance they are prepared to travel.

The more flexible they are … the lower the fare.

This new business model … of private jet service … is being made possible by the development of new Very Light Jets (VLJ) … like the four-passenger Elipse 500 … whose airframe made of strong but light composites … and Pratt & Whitney engines … barely the size of a washing machine … allow a sticker price of under $2 million.

Per-seat … on-demand … private jet service would offer flexibility … the calm of dedicated terminals rather than the hassle of hubs … and promises to be affordable.

It may well be a model that transforms the business market.

My friend Bob Crandall …who will be joining us for the great debate on Friday … certainly thinks so.

His POGO airline was to start with 100 Elipses. … However … the current financial crisis may make it difficult to attract the required funding.


Ladies and gentlemen … last year at this Forum … I concluded my remarks with a plea … for this industry to come together in a coherent … determined and visible fashion … to address the threat of greenhouse gases.

This year … I would like to propose another “bête noire” to worry about … and which represents a hidden threat to our industry and our planet … just as serious as environmental pollution.

That threat is … infectious viral disease pandemics.

A virtual elephant in the room … still largely invisible in terms of public … and governmental concern.

Remember how the SARS epidemic of 2003 shocked the world … and the damage it did to our industry?

Modern air transportation made it possible for SARS … to spread from mainland China to all corners of the world … in a matter of weeks.

The epidemic cost the world many billions of dollars … a forewarning of the disastrous social and economic consequences … of a more widespread pandemic.

Worldwide … infectious diseases account for over one fifth of human deaths … killing some 17 million people a year.

In many of the poorest countries … infectious diseases are responsible for over half of all mortalities … trapping entire populations in a vicious circle … of disease and poverty.

Little has been done to develop effective … readily available … antiviral drugs to treat these diseases.

Less than 10% of the money invested in global health research is applied to infectious diseases.

The increasing cost of research and development … and competitive pressures … have led pharmaceutical companies … to focus their research dollars almost exclusively … on the more lucrative ailments of the West.

In the last 30 years … only 1% of new commercial drugs were designed specifically for infectious diseases.

Yet the threat of infectious diseases is not limited to the developing nations … and international air travel can allow pandemic infections … to circle the globe a matter of hours … with potentially devastating effect.

To address this problem of “neglected diseases” … an international … not-for-profit Consortium has been established … linking some 200 scientists in twenty-four countries.

This innovative model facilitates the sharing of academic research in a collaborative network … and will speed up the identification of promising therapeutic discoveries.

To solicit funds to finance the research and development of antiviral therapies … a Foundation has now been established.

Its specific role is to take promising drugs from academic laboratories through pre-clinical and clinical trials …a stage of the development process that receives little public funding.

I have agreed to become the Chairman of this International Foundation … and I am pleased to announce that Mr. Jacques Chirac … former President of France … and Mr. Jean Chrétien … Former Prime Minister of Canada … have both agreed to be Honorary Patrons.

The Foundation on Antivirals … known as FAV … has been approaching high-profile individuals … corporations … and institutions to seek their financial support … and moral endorsement for this critically important cause.

For obvious reasons … we would naturally expect the travel and tourism industry to be supportive.

And many of you … present today … are indeed representatives of these industries.

I look forward to your support!


Ladies and gentlemen …

Caught in the downdraft of the financial crisis

Tossed around by the turbulence of fuel price volatility

Buffeted by an economic recession of potentially worldwide proportions

The air traffic world is flying through perhaps the most threatening skies… it has ever encountered.

The storm is far from over … and while the airlines in the U.S. are taking the brunt of the storm … European carriers will increasingly be exposed … and so will the BRIC airlines.

Even the Gulf carriers … up to now largely unconcerned … would be wise to prepare to be engulfed as well.

No one will escape the fury of the current storm.

But … there are some positive elements of importance to our air transport world:

Those looking for silver linings need look no further … than our industry’s strong commitment to flying green.

Concrete progress is being made by almost every sector …the notable exceptions being air traffic control … and government-imposed carbon taxes.

Another silver lining … is Phase I of the new “open skies” agreement between the United States and Europe.

I hope this watershed block-lateral agreement will encourage … other regional common air market agreements … in Asia … Latin America … and elsewhere.

Still another encouraging sign … is our industry’s ability to evolve its structure … to cope with economic downturns …, changing markets and traffic patterns … and varying customer needs.
Among the most remarkable structural changes taking place are:

The emergence of the Gulf States as the new hubs for international travel;

The successful “big three” mergers in Europe … and their attendant effects on the non-aligned airlines; …

The antitrust-immunized joint ventures on the North Atlantic; …

Some mainline carriers launching all-business class services as the start-ups in this market go belly up; …

The low-costs modifying their successful formula with business class and long-haul services; … and

The emergence of affordable … per-seat-on-demand … private jet service.

Managing in this uncertain environment will require strong nerves … a steady hand … and the occasional dose of tranquilizer!

One thing is certain …

The future is not what it used to be!

Thank you

Annual AGIFORS Symposium – Dinner Speech

Operations Research… and May the Past be Prologue
Annual AGIFORS Symposium – Dinner Speech

Montréal, September 26, 2008  >>


Ladies … gentlemen … and O.R. Practitioners

You are at the end … of a few days of intensive discussions … on Operations Research models and their various applications.

In thinking ahead about this address … I was reminded of a good friend of mine … who was Chancellor of a Canadian University … He once told me … that a statistical analysis had been carried out … on the effectiveness of his speeches on various audiences.

The analysis revealed that …

A good start …. Either amusing or thought-provoking … could capture … as one would expect … the attention of his audience for about five minutes.

From then on … the attention span would start to stochastically decrease gradually over the next ten minutes of so.

By the end of that period … it was found … with a margin of error of 1 in 20 … that for ninety-five percent people in the audience … their brains would begin to drift … into a variety of erotic fantasies.

He would then conclude … “You know Pierre … Over my many thirty-five to forty-five minute speeches … you would be simply amazed at the amount of pleasure … I have induced to my audience!”

I wonder how much pleasure the Cuban people would have experienced … listening to a four hour speech by their great leader … Raoul Castro!


Joking aside … it would seem reasonable … to assume … that the attention of any audience decreases over time … and with it …. the absorption rate.

Of course … this would be modulated by the eloquence of the speaker … and the interest the audience in the subject.

Assuming … that we are not talking about politicians … – I apologize … if there are any in the room – … but about people communicating meaningful information …. such as operations research members of AGIFORS undoubtedly would … then the amount of real and valuable … information transmitted … should also increase with the length of the address.

With absorption capability decreasing over time … and the amount of information communicated increasing with time … we have a classical O.R. case … which should suggest … that the optimum speech length should be defined by the saddle point.

However … this by itself would likely be an incomplete model … without the introduction … of some measures… of value to the audience.

We need to introduce a third dimension … a subjective evaluation … of the audience’s measure of satisfaction.

We should assume that satisfaction increases with understanding … but this is unlikely to be a linear function … because having reached a peak … our satisfaction curve would start to decrease with the attention span … and boredom may start to creep in.

I have now managed to complicate my little model … and a new optimum would now have to be found … as a point in our three-dimensional space.

I will leave you to judge … in this particular case …. whether my remarks will come … anywhere close … to the kind of saddle point … which would achieve an optimum level of satisfaction for you … the audience.


Upon receiving the invitation from Lise Fournell to join you this evening … I was very pleased to see that AGIFORS is … in all evidence … still a vibrant group.

As a founding member of your Association … it is most rewarding to see … that the gleam that existed in our eyes at the time … has not only survived … but very much prospered … both in terms of talent … and importance.

The genesis of AGIFORS can be traced back … to an international IFORS meeting in Oslo in 1960 … (the International Federation of Operations Research Societies).

Dr. Sandiford … who was at that time head of the Operations Research Group in Air Canada’s Headquarters … and I … [ I was then heading a small group of Operations Researchers in the Operations Department of Air Canada ] … were the only two Canadian delegates attending this IFORS Conference.

We presented a paper on management simulation … of which several had already been developed in Air Canada.

A number of other airlines’ Operations Research practitioners were also present in Oslo … and the discussions that took place at that time … suggested that there could be some merit in creating an airline group within IFORS.

The choice of setting up a sub-set of IFORS … rather than a sub-committee of IATA … was quite deliberate …. We felt that there was more to be gained … by being part of a broader scientific community … than a sub-set of an airline-driven … commercial and operations association.

The first AGIFORS group met in October 1961 in Sun Valley … New York … and regrouped some twenty-five practitioners.

I undertook to organize the second meeting … which was held … as Lise may have pointed out … in Val Morin … in the Laurentians … just North of Montreal ….. in October 1962.

Right from the start … the airline operation with its complexities … network characteristics and the usual scarcity of resources … appeared to be a natural for O.R. applications.

The need to optimize the utilization and deployment of very expensive assets … the aircraft … the efficient allocation of crews … the need to develop commercial models to deal with the competitive nature of aviation … all of these dimensions were certainly fertile ground for a more rational examination of the factors involved … the various alternatives … and evaluation of potential outcomes.

I note from the papers which were presented at your conference … that schedule models … and revenue generation models …. for instance … are still popular topics.

Of course … they are addressing new realities … such as the optimized routing of air taxis … and operators of business jets.

In the case of revenue generation … the question of product segmentation … customers’ purchasing behavior … and effectiveness of channels of distribution … are still very interesting subjects.

Getting back to that first AGIFORS meeting … I believe that Air Canada was the first … to develop an airline management simulation game.

This computerized airline management game had been one of the papers… we had presented at the IFORS meeting in Oslo.

It has since been extensively used and refined … and today … a later version is a centerpiece of one of IATA’s Executive Management Courses … and still continues to be very successfully utilized.

I recall that … in order to test its realism … we challenged some well-known Canadian businessmen – … two brothers who had built something of an empire in the distribution field – … to play the game against our team of O.R. practitioners.

It was interesting to see that … once they had become familiar with the game … they were able to beat us thoroughly in a competition … demonstrating that their business acumen and experience … could easily outsmart our more limited knowledge … as O.R. practitioners … of operating a business.

The experiment did … however … confirm … – and it was their opinion – … that the simulation we had developed …responded well … to the dynamics of what they considered to be a real life environment.

During this period …I was also very active in the Canadian Operations Research Society … which was also affiliated with ORSA … the American society … as well as TIMS … the Institute of Management Science …

The Canadian experience was quite interesting … as some degree of similarity existed … in response to the problems being faced by the airlines … and some of the other major network operators …whether railroad … or telecommunications.

My involvement in the Canadian Operations Research Society led me to be Secretary of the Society in 1962-63 …and subsequently President of CORS … in 1967.

This invitation to speak at this AGIFORS Symposium … revived my curiosity about the evolution of the field.

Looking up the website of C.O.R.S. … the Canadian Operational Research Society … many of familiar names (subjects) are still being addressed – … scheduling … queuing … simulation … optimization modeling … are all familiar subjects.

Looking up the list of previous CORS Presidents … I saw another thing that had not changed.

They still do not know how to spell my name! … Of course … even mathematicians have their limitations.

Interestingly … I noted on CORS’ list of events … that from the 7th to the 10th of December this year … a conference on winter simulation is being held in Miami, Florida.

They might have considered holding it in Montreal at that time of the year … and experience the real thing!

Operations Research was not very well understood in the early days … and this may well still be the case today.

I remember once being asked … by a misinformed Committee of Parliamentarians … to report on our research into medical surgical operations!

On another occasion …I tried to explain to a U.S. immigration agent what operations research was … which was how I had identified my profession.

After listening to my explanation for about five minutes … he proceeded to write down “clerk”.

I chose at the time not to contest his decision … and simply be content with having been accepted as a visitor … to the glorious land of Uncle Sam!

Another time … I was the Co-chairman of a Joint CORS ORSA Conference in Montreal … I had to get through Customs some 1000 copies the program … which had been printed in the U.S.

Again … I attempted to explain what this pile of documents was all about.

The befuddled Customs Officer was trying to assess what he should charge in terms of customs duty … for this printed material.

In the middle of my explanation I said to him … that Operations Research was to Management like a new religion.

This instantly resolved his dilemma … as religious material was to be admitted … tax free.

With a sigh of relief … he cleared me and all my documents.


I have found … as I suspect many of you have … that the great military strategists … were a good source of inspiration in addressing some competitive situations.

A decisive battle is a zero-sum game … with winner takes all … and as General Paton was fond of saying … “In war there is no prize for second place!”

In a competitive arena … in any specific market … and whether there is only one … or many … competitors against you … good intelligence is paramount.

The basic rules followed by all great Generals … from Alexander the Great … to Napoleon … and even Mao Tse Tung … are amazingly similar.

They considered it to be absolutely essential … to have as up-to-date … and as complete … information as possible about the strengths … the weaknesses … and the basic strategy of their competitor.

They would always … take great care … to engage in a battle at a time … and on a field … of their own choosing … even if it gave the appearance of retreating.

They would take time to simulate ahead of time … the relative position of the respective players during the battle … along with the alternative moves … and likely counter-measures.

Those great Generals would attempt to avoid getting distracted on too many fronts.

When they would have decided to attack … they would concentrate the maximum of their capabilities … on what they believed to be … their competitors’ main weaknesses.

Speed of decision-making … and swift action… are always extremely important factors in ensuring success.

And finally … most decisively won battles … have included a surprise element … sometimes a carefully orchestrated deception …

Once again … good intelligence about what your competitor knows … or assumes … of your strategy … is essential.

Although the principles of military strategy have not fundamentally changed … in my view … the ability to get pertinent information precisely … correctly … continuously updated … has simply exploded.

Multi-sensor scanning … from satellites … from unmanned air vehicles … or from ground-based fixed and moving platforms… are able to provide continuous information through a network-centric capability.

Sophisticated data fusion … filtering and relevancy identification processes …provide valuable information which is transmitted … instantaneously to the field commanders … along with accurate identification of threat and alternative response.

Electronic warfare … an increasingly precise reality … is resulting in substantially increased efficiency of military capabilities.

Once again … processes and systems developed for military applications … are likely to find their way into the commercial world.

Thus … time and time again … the key word is intelligence …which is why the function of Chief Information Officer … the CIO … has become … such an essential member of the senior management team of most … if not all companies.


The variety … the volume … and urgency of issues that need to be addressed … by Executives … may often prevent the careful development of appropriate models to resolve any particular issue …

However … the mental discipline which has been acquired in the development of OR-type solutions … is undoubtedly … very useful in analyzing the issue confronted … and in making the right decision.

Indeed … I often found this type of disciplined approach to be useful during my days at Air Canada.

For example … as Head of Marketing … it proved a valuable tool in identifying …and evaluating … specific strategies … in the light of the competitive environment that we were facing at the time.

Later on … as CEO … a disciplined approach was absolutely essential in evaluating different strategic alternatives … in our efforts to privatize the corporation which … at the time … was State-owned.

Similar approaches have been useful … in my more recent role as Director General and CEO of IATA.

To give you an example of a typical strategic approach …the following anecdote could serve as an illustration.

Towards the end of the last decade …, traffic was growing rapidly between Europe on the one hand … and Japan … Hong Kong … and South Korea on the other.

Unfortunately North Korea … which controlled a rather large flight information region … would not permit any aircraft to cross its designated airspace … thus forcing all airlines to fly around at considerable cost.

This was an increasing source of frustration … and every effort by the international community to influence the situation had failed.

North Korea had a small national airline called “Air Koryo” … which was anxious to achieve some degree of international recognition … and Air Koryo approached IATA to join our Association.

Air Koryo being State-owned … this provided an opening for us to begin discussions with the North Korea government.

We now had a basis for negotiation.

There were two immediate hurdles in suggesting the opening of the North Korea airspace.

The first was that the Pyongyang air traffic control centre … was not adequately equipped … to provide the necessary oversight and control of flights going through its region.

Secondly … communication between North and South Korea was strictly prohibited.

This would become a major impediment … as it would be necessary for the air traffic control centre of Pyongyang … to pass on information to the Seoul Air Traffic Control … as any aircraft crossed its airspace.

An additional factor in our favor … was the fact that North Korea was rather short of foreign currency … particularly US dollars … and they had not been aware that air traffic control centers … guiding airplanes through their airspace … could charge an appropriate fee … and thus earn valuable foreign currency.

We were able to demonstrate to the North Korean authorities … that opening up their airspace to very specific corridors … jointly defined … could be carried out with virtually no security risk to them.

These corridors would enable the international airlines … to achieve considerable savings in time and cost … by crossing that airspace.

As the North Koreans were short of U.S. currency … we offered to advance the funds … to train their controllers … and to adequately equip their air traffic control centers.

We arranged for an appropriate charge formula … collected the fees from the airlines … supervised the upgrading of the North Korean control centers … and thus got the centre to be fully operational.

But there remained a major difficulty … which was the lack of communication between North and South Korea … and North Korea was absolutely rigid on that point. … Under no circumstances could there be any direct communication between North and South Korea.

To overcome this particular constraint … IATA offered … – and subsequently received authorization –… to set up and operate the telephone lines between Pyongyang and Seoul … so that North Korea could continue to feel that they had not established any link with South Korea.

With all this having been agreed … it was implemented. The result was a typical case of Minimax:

Minimum giving in on the part of North Korea in terms of their self-imposed constraints and restrictions … with the maximum amount of benefits derived in terms of improving the functioning of their ATC …generating foreign currency … and achieving international recognition for their airline.

For the international airline community … the ability to fly through the admittedly still restricted North Korea airspace … was providing them with savings in fuel and operating costs of around $150 million a year … well worth the relatively reasonable fee for air traffic control which North Korea charges … and which was based on IATA’s recommended formula.

This was clearly a win/win which … as you would certainly recognize … required the identification of the various factors involved … and the search for the optimum compromise … which finally led to a satisfactory solution.


Finally … I believe … that Operations Research has been … a great incubator for the development of executives … and that this is still largely the case.

In Air Canada … out of the twelve or so … members of the O.R. group at the end of the 60’s … six eventually progressed to the level of Vice President … or Senior Vice President … and your humble servant even made it to the level of President and CEO.

Air Canada is not a particularly unique case in this regard.

Lise Fournel is a good example that … starting as a fairly junior O.R. practitioner less than twenty years ago … one can still become a Senior V.P.


Ladies and gentlemen … the airline industry has always been under stress … and probably always will be … as the current crisis affecting our industry is a good example … of what aviation faces periodically.

There has never been a shortage of issues … and there have always been too few resources.

It is a natural field for O.R. applications.

Over the years … as an O.R. practitioner … I have learned that the KISS principle is useful to keep in mind … (Keep It Simple Stupid).

I have designed models that have virtually collapsed under their own complexity.

Mathematical elegance may be academically attractive … and indeed useful … in getting your papers published … but it may be useless to your airline … if the implementation is overly complicated … and does not yield real results.

I remember that when Yogi Bera was asked … if there was a difference between the theory and practice …. he said …

“Well … in theory there is no difference … but in practice there is!”

O.R. practitioners can be very useful internal consultants … but must remember … that not every problem requires a sophisticated solution.

All too often … executives do not have the luxury of time … They must act quickly … now.

A simple quick analysis … today … with its stated limitations … may still be of better help … than a more thorough analysis … produced too late to impact a decision.

Finally dear colleagues … I guess that it may be permitted to use that term … as a former O.R. practitioner … I feel that … by now …. I may have been sliding down your retention curve … way past the saddle point!

On the basis that no speech is entirely bad … if it is relatively short …I would like to thank you for the opportunity you have given me … to get back to my O.R. practitioner roots.

And to reminisce about AGIFORS … and O.R. in general.

I wish each and every one of you … much success in your respective careers … as O.R. practitioners of course … and also … undoubtedly for a number of you … as airline executives.

Thank you!

Keynote address to the 21st Annual Canadian Airline Investment Conference

A Perfect Storm?
Keynote address to the 21st Annual Canadian Airline Investment Conference
Toronto, June 2o, 2008  >>


Ladies and gentlemen:

Those of you who may have glanced at my biography have probably concluded that I have been in aviation a fairly long time.

Well to tell the truth, when I started in the airline – in those days Air Canada was called Trans-Canada Airlines – commercial jet travel had just become the latest novelty.

Over the many years that I have been in this crazy business, I have seldom experienced a dull day.

I feel quite confident that the airline executives participating in this event would support that observation.

I am thinking more specifically of Bob Deluce and Joe Randall. Indeed, I should thank them both for having done such a fine job some 25 years ago or more, in heading the two regional airlines which preceded Jazz.

In the case of Bob – Air Ontario; and Joe of course was heading Air Nova.

The creation of a number of regional airlines across our country was one of the important elements of my restructuring strategy which was required to make – what was at that time a Crown Corporation – privatize-able.

You will appreciate that setting up these regional airlines, each with a much lower operating cost structure than Air Canada, could provide good service with a fleet of Dash-8s to markets too expensive to serve with the DC9-30’s and Boeing 727-200s of the Air Canada fleet.

It was a sort of a win-win. Good and affordable air services were being provided at dozens of locations being abandoned by Air Canada, and the main airline was substantially lowering its domestic operating cost.

It is rather nice to see that the fledgling children we launched back then have become a solid and profitable airline, playing a very valuable role in this country.

By the way, another initiative launched at approximately the same time was Aeroplan!

But for this we have to blame American Airlines. My counterpart there, the famous Bob Crandall, had launched the American Advantage Bonus Plan.

Within weeks we had created our own response which was Aeroplan, but unfortunately, in the then highly regulated environment of the times, the Canadian Transport Commission turned down our proposal.

Following more than six months of frantic negotiations, we finally prevailed – but by then we had lost some 5% of our high-yield Transborder business class traffic.

Fortunately for us, Aeroplan became very successful very quickly, although no one would have ever imagined that it would become the important stand-alone business it is today.

Incidentally, I am not mentioning these two success stories merely for nostalgic reasons.

They are good examples of monetizing some of Air Canada’s hidden values, which is one of the important actions one should take, particularly in times of crisis.

And today the aviation world is certainly facing yet another crisis.

In Istanbul, at the IATA AGM a few weeks ago, some U.S. airline CEO’s were describing the current situation as a “Perfect Storm”.

This is because costs are going up while at the same time revenues are coming down.

This is most disappointing given the fact that we had recently experienced better than average traffic growth.

IATA reported that international traffic grew by 7.2% in 2007 – close to the 7.6% increases achieved in the previous year.

Most encouragingly, business travel was expanding at a fairly good pace during 2007, providing to the network airlines a great source of yield improvement.

Indeed, in the long haul markets travel in business and first class was growing faster than economy.

With capacity growing at a slower pace than traffic, load factors in both international and domestic markets reached the high 70s.

Airline revenues increased by some 7% in 2007 and profitability, although still very much insufficient, reached a 4.2% return on investment.

While this represented better results than the industry had been able to achieve for many years, this result is still far too low to attract capital and ensure financial sustainability in the long run.

In 2007, fuel started the year close to 50 USD a barrel, and then rose to hit 100 USD a barrel.

By the end of last year, it looked like many airlines were hoping that fuel had peaked and that – if the sub-prime crisis was contained – the economy would return to a reasonable rate of growth.

But the first half of this year has shown that this view was overly optimistic.

There is probably light at the end of the tunnel, but no one seems to be venturing a guess as to how long that tunnel may turn out to be.

With some markets undergoing rapid decompression, the likelihood of over-capacity at times of economic slowdown shows that once again we have not learned from the past.

Revenues of airlines are closely linked to economic cycles. Airlines tend to order airplanes at the top of the cycle…

All too often, unfortunately, the airplanes are delivered during a downturn.

Over the past two years, airlines have ordered an unprecedented number of airplanes.

With these airplanes about to be delivered at the time of decreasing traffic – and with the cost of fuel sky-rocketing – this amounts to a rather disastrous scenario.

I am told that at least one U.S. airline executive, totally bewildered by this situation and unable to decide what to do, finally turned to his local preacher for advice.

“Put your faith in the bible”, counseled his spiritual adviser, “and you should find an answer in there.”

Our airline executive, bible in hand, went walking on the beach, meditating.

Tired of walking, he sat down, placing the holy book at his feet.

Suddenly there was a strong gust of wind and the pages of the bible began to flip furiously. Then, just as suddenly, the wind dropped. Eagerly, our airline executive picked up the book and looked at where the pages had stopped flipping. It said “Chapter Eleven”.

Unfortunately, for many U.S. carriers it’s a case of “been there – done that”, and I am quite sure that they have no wish to go through that painful process again.

And thus the aviation world is facing yet another crisis, partly caused by the recent rapid rise in the price of a barrel of fuel and, to some extent, the sub-prime financial crisis which has started to undermine the confidence of consumers, primarily in North America.

On the basis of an average oil price of 120 to 130 USD per barrel for the current year, IATA is now forecasting an industry loss of $2.3 billion.

This is a major swing from their initial forecast of a profit of $6.8 billion based on last year’s expectations.

We are told that some 24 airlines have suspended operation, or gone out of business, in the past six months.

These include the three “business class only” airlines which emerged in the last three years, attempting to create a new niche across the Atlantic.

Year over year, in the first quarter of this year, global passenger traffic slowed down markedly, although the worldwide average has remained, for international traffic, at +5%.

At the same time, domestic traffic fell everywhere compared to last year over the first four months of this year.

The largest domestic market, the North American market, is definitely on a decreasing slope.

As a result of the worsening U.S. situation, “legacy” carriers have once again launched some major capacity reduction, taking the opportunity to ground many of their older airplanes.

United Airlines has announced that it will retire 100 mainline jets. This would include ninety-four of its B737s and six B747s. The cumulative mainline domestic capacity will shrink by 17-18%.

Continental Airlines plans to retire twenty-four B737-300s out of a fleet of forty-seven and thirteen B737-500s out of a fleet of fifty-five.

Some further reductions are planned for 2009, which will amount to a mainline capacity reduction of 14-16% in total.

Continental has announced that 3000 jobs will be eliminated.

American Airlines plans to retire forty to forty-five mainline aircraft, mainly MD80s and some A300s. This amounts to approximately 11-12% of capacity reduction.

The so-called “low costs” are also affected, slowing down their expansion.

Jet Blue Airways is deferring delivery of twenty-one A320s from 2009-2011 to 2014-2015.

Air Tran Airways is deferring the delivery of eighteen B737-700s from 2009-2011 to 2013-2014.

Southwest, while still taking delivery of twenty-nine new B.737-N.G. airplanes, is now planning to retire sixteen older B737s this year.

The price of fuel represents the largest percentage of operating costs for low cost airlines, in some cases in excess of 40%. This makes them more fragile and could lead to more failures and/or consolidation.

Although less affected at this point, the European low costs are responding as well to the cost challenge.

Ryan Air achieved a hefty profit at the year ending March 31, but it has announced plans to ground about 10% of its fleet during the winter schedule.

Air Berlin reported a net loss of close to 60 million euros in the first quarter of this year, and has embarked on a major cost reduction program.

Although the general weakening of the global economy is worrisome to all airlines, the impact of high fuel increases is somewhat less for European airlines because of the strength of the euro.

As well, most E.U. airlines have hedged a large proportion of their anticipated fuel needs for 2008.

As such, the main European international carriers – although continuing to look at ways of reducing cost – have not decided to dramatically reduce capacity as have their U.S. counterparts.

The structure of the world economy has changed considerably since the last financial crisis.

The rapidly growing Asian economies have increased their internal and intra-Asia trade, and are much less dependent on the U.S. economy.

China, India, and other Asian nations, as well as the Middle East, more particularly the Gulf States, are set to continue their expansion aggressively – at least for the time being.

But the outlook remains very much uncertain, with several unanswered questions.

Will the weakening of the U.S. economy cause serious damage to the economy of its trading partners?

Is the full extent of the sub-prime financial crisis now fully known – and contained – in the U.S. as well as elsewhere, given the fact that some of that sub-prime debacle was exported through the international financial network?


Is another bubble about to burst?

The Gulf airlines such as Emirates and Etihad have remained very optimistic in terms of their projected growth, and have not modified or delayed the delivery dates for their fleet acquisitions.

More particularly, Emirates recently stated rather clearly that it intends to continue to take delivery of fifty-eight A380s currently on order.

The Chinese airlines, led by Cathay Pacific, are enjoying participating in the growth of the Asian economy, and thus far have not felt threatened by the so called “slow-down” in international markets.

However, we should expect that there will be further losses and consolidations… in Southeast Asia and India, as a result of the recent proliferation of low cost airlines and the price wars that have resulted from the ensuing excess capacity. This current excess capacity situation is, of course, unsustainable and within the next year or two will lead to a rationalization of the situation.

The consolidation process which has been ongoing in Europe for some time is continuing.

The case of Alitalia would have been settled by now if it had not been become a political football during the last Italian election and temporarily stopped.

I would expect that even Prime Minister Berlusconi cannot escape the inevitable.

Shopping for a buyer for Iberia is continuing, and Lufthansa is now in a position to exercise its right to take control of British Midland International – and its very valuable London Heathrow slots.

In the U.S., we are all too familiar with the regrouping underway.

Delta and Northwest should soon be a “fait-accompli”, although there may still be substantial discontent by the Northwest Pilots which should be resolved as soon as possible if the integration is to be harmonious.

And then there is the question of whether or not United Airlines will be able to merge with Continental, now that getting together with U.S. Airways has proved to be impractical.


And we should not forget that American Airlines is also interested in the right merger.

Of course, size does not guarantee survival. If this had been the case, Eastern Airlines and Pan Am would still be around today.

And there is no doubt that many mergers and acquisitions have not resulted in increased shareholder value – sometimes quite the opposite!

Nevertheless, there have been examples of successful mergers, for instance U.S. Airways. Iin Europe we can point to KLM/Air France, and to Lufthansa/Swiss, both of which have worked out rather well.

With the actual seat occupancy factor for most airlines in the high seventies and low eighties – and many U.S. airlines cutting back capacity – very little room for revenue improvements can be expected from carrying more people on each airplane.

This means that the price of fares in the U.S. will inevitable need to go up significantly, given that all other cost components have been thoroughly reviewed – and reduced – to the extent possible in the last few years.

Elsewhere, the many new aircraft deliveries and increased liberalization are likely to continue to put pressure on yields. The high cost of fuel, however, should encourage the airlines to park or scrap older airplanes, and reduce the excess capacity.

It is somewhat unfortunate that the delivery of the latest types of aircraft being produced by both the major manufacturers – Boeing and Airbus – have been delayed.

They represent a significant improvement in operating cost, and in particular fuel consumption.

Their deployment would have considerably helped airlines to reduce their operating costs.

The fuel consumption per passenger-kilometer achieved by the Airbus A380 represents a significant reduction, but unfortunately the production rate of this new airplane is much lower than originally anticipated, which will prevent deliveries from taking place as planned.

Additionally, the continuing delay, of probably some two years now, for the B787 will prevent airlines from achieving a much better operating cost, and force the continued use of much less efficient, older B767s and Airbus A300s.

The U.S. carriers will continue to face a rather difficult time, given that they have some of the oldest fleets around and, unfortunately, their weak balance sheets are likely to be further battered by the current financial and fuel crises which will severely restrict their ability to modernize their fleets rapidly.

This will also likely prevent the U.S. carriers from taking advantage to the same extent as their European counterparts, of the opportunities arising from the recently implemented U.S.-E.C. air bilateral, which will provide a great deal of flexibility and encourage new services to be launched across the Atlantic.

A vigorous implementation by several carriers of the new Freedoms offered by this bilateral could further stimulate the market, and could act as a counter balance to the current down trend in traffic.

It is well known that new market opportunities always stimulate the market in general and create new growth to the benefit of the economies at both ends of the route.

The main Canadian carriers, WestJet and Air Canada, benefit from relatively newer fleets than their American counterparts, and this should hopefully provide them with a cost advantage when competing trans-border with the American carriers.

Thus with the rather strong Canadian dollar and a more fuel-efficient fleet, the Canadian carriers should be in a position to take advantage of the current difficulties of their American competitors.

Invariably, airlines place large orders for new airplanes when the economy is good and traffic is growing, but unfortunately – and frequently – inevitably delivery of those airplanes takes place when the economy is weak and traffic is decreasing.

We could be facing a similar situation once again.

Over the past two years, an unprecedented number of new airplanes have been ordered, both Boeing and Airbus. Admittedly, many of these were ordered by the so-called “BRIC” economies – Brazil, Russia, India and China – where air traffic has been growing in double digits.

If the current economic crisis – still somewhat focused around North America and the international banks – begins to resolve itself by the end of this year, the airline crisis may equally show signs of resolving itself – barring the fact that a few more carriers will fail and/or consolidate their operation.

However, should the economy worldwide show further deterioration, we would be faced once again with substantial overcapacity over the next couple of years, with the associated dire consequences of price wars and further bankruptcies.

The financing needed to cover this big order of new aircraft is considerable, and one may wonder whether the financial markets are able to respond adequately to this challenge, given the traditional fragility of our industry.

To state the obvious, those airlines which have a solid balance sheet – and good cash flow – will have little difficulty in meeting their financing requirements.

Unfortunately, this is unlikely to be the case for majority of the airlines, which may result in a still greater percentage of airplanes being owned by the leasing companies.

The regional airlines on a worldwide basis will continue to grow, although possibly at a slower pace, but the high price of fuel will also have an impact on their viability.

The current fuel crisis is giving new life to turbo props, which had continued to be out of favor with some consumers who wrongly believed that these airplanes are older generation than the jets.

Bombardier’s Q400 has re-gained some popularity with the consumer, and there are even questions of developing a stretched version.

With the acknowledged inability of both Boeing and Airbus to begin work on an eventual replacement for the A 320 family and the B737 family, the Bombardier C series may find itself in the fortunate position of filling that gap.

Neither Boeing nor Airbus is likely to produce a new single aisle airplane much before 2020, and if the C-series can actually be produced and become operational by 2012-2014 – and assuming it is able to deliver a 15-10% improvement in operating costs, including fuel consumption – it may well become a very popular choice both for the regional carriers and the mainline airlines for the larger 100-135 seat market.

A good part of that cost improvement depends, of course, on the success of the engine being developed by Pratt & Whitney, and on Bombardier gaining from the experience of the two main manufacturers on the increased use of composites for the fuselage and for the wings of that airplane.

Far from having to worry uniquely about fuel cost, security, and air traffic congestion, the airlines still have to contend with their “carbon footprint” and the proposals in different parts of the world, in particular Europe, to charge to compensate for the CO2 being released by aviation.

Biofuels, some believe, may be one of the giant steps the industry needs to take to achieve a significant reduction in CO2 emissions.

Richard Branson is one such believer, and has said that he intends to build plants to produce an environmentally friendly aviation fuel.

His Virgin Fuels subsidiary has formed a partnership with Boeing, GE Aviation, and Virgin Atlantic, to demonstrate the feasibility.

From a practical point of view, this in my view is more for the sake of appearances – to show that something is being done – than for practical results.

Incidentally, scientists calculate that it would take six million square kilometers – an area the size of Europe – to produce enough biofuel to totally replace jet fuel using soybeans.

And recently, the current agricultural crisis has put the spotlight on the disadvantages of crop-generated biofuel, and is likely to force a review of that approach.

Last year at the World Air Transport Forum in Cannes, I suggested that algae were probably the most likely – and least damaging – source of biofuel.

Recent research has shown that algae would do the same job with only 35,000 square kilometers. Not only do they absorb great quantities of carbon dioxide during their lifetime, but they are also a source of energy-rich oil that can be turned into fuel.

I understand the U.S. industry is now focusing more of its attention in this direction.

Fuels, engines, and aircraft are all critical components of the air transport industry in its drive for sustainable development.

All offer good promises in the long term.

In the short term, there are great opportunities for significant reductions in CO2 emissions by streamlining air traffic management.

Three fairly well-defined projects could delivery real results

A Single Sky for Europe

An efficiently coordinated and integrated air traffic control operation for the Pearl River Delta in China

And implementation of the next generation air traffic system in the U.S.

The Single European Sky alone could deliver a 12 million ton reduction in CO2 a year.

But governments are dragging their feet. With strong political will, a Single European Sky could quickly become reality.

Well truly, ladies and gentlemen, this industry has never faced a shortage of challenges – and we are unlikely to experience a dull day any time soon.

But… are we facing a Perfect Storm? And is this likely to be the worst crisis since the great depression, as some have suggested?

Naturally, the U.S. domestic air traffic situation – and the soaring costs of fuel – are good reasons for the U.S. carriers, both legacy and low costs, to be pessimistic.

As for the other markets, in Europe, Asia, and the Middle East, the traffic forecasts remain relatively strong for this summer.

Whatever happens to the U.S. economy in the next few months will be watched very closely, and there will be a temptation to reduce capacity for the Fall as a precautionary measure.

Having survived – with scars to prove it – through four or five major aviation crises to date, I am not prepared to declare this one as the worst!

My first experience goes back to the 1970’s, when the price of oil increased from 2 to 3 USD per barrel to some 12 USD a barrel over a relatively short time.

This caused much pain and adjustment.

But for my money – and without any doubt what-so-ever – the worst crisis I have ever had to face was 9/11.

We came close to a complete collapse of the aviation system as the skies over North America remained silent for some five days, and the economy almost came to a halt.

I was the Head of IATA at the time, and fully engaged in the struggle to get the system re-instated – urging the re-opening of air traffic, implementing security measures, keeping some aviation insurance available, etc.

The intensity, depth, and duration of that 9/11 crisis will hopefully never be matched.

This is not to say that I am unconcerned by the current situation – far from it. It is serious, and the end is certainly not in sight – but I would be tempted to say, as Mark Twain once said coming out of Wagner symphony…

“Perhaps it’s not really as bad as it sounds”.

Thank you!

High Level Summary of Commercial Aviation’s Current Situation

High Level Summary of Commercial Aviation’s Current Situation
Industry Update
February, 2008  >>


In many respects, commercial aviation enjoyed an exceptional year in 2007 with traffic growing worldwide at 7.4%. The region of maximum growth was the Gulf at +18%, followed by Africa and Latin America at +8%, Asia/Pacific at +7.3%, and Europe and North America at around +5.5%.

During 2006 and 2007, some 4,700 airplanes were ordered from Boeing and Airbus which represents a 30% increase on the size of the current fleet. Both manufacturers considered that aircraft ordered achieved a peak in 2007, and they are expecting to have substantially less orders in 2008 and subsequent years.

Despite this exceptional traffic growth, profit was inadequate. The worldwide net profit for international airlines was $5.5 billion, which represents only 1% of revenues

The cost of fuel and continued pressure on yields contributed to the disappointing profit results.

For 2008, IATA forecasts traffic growth to return to a more normal 5%, with net profit coming down to $5 billion. One should remember that historically, the long term growth of traffic worldwide averages 4.5 to 5% per annum.

Both Airbus and Boeing have produced another 20-year forecast which project that the fleet of airplanes of more than 100 seats will grow from 13,500 in 2006 to 28,500 by 2026. As expected, the growth in the number of airplanes by types varies between manufacturers, the main difference being that Boeing forecasts a need for 960 Very Large Airplanes, while Airbus projects 1,700 of those. Boeing forecasts a need for 17,600 single aisle aircraft, and Airbus projects 16,500.

For regional airplanes of 80-110 seats, the current 10-year forecast projects 1800 units. The demand for 50-seat regional jets is expected to virtually disappear, and to greatly diminish for jets in the 70-80 seat range.

The recent deterioration in the economic situation in the U.S. has introduced some uncertainty. The main visible immediate impact is a significant reduction estimated at 40% in the start of new homes, which will increase unemployment and reduce personal consumption including air travel.

This seems to have prompted the more traditional (legacy) U.S. airlines to re-examine the need to downsize their operation and gain efficiencies by mergers. At the present moment, Delta and Northwest are said to be actively engaged in merger discussions, and it would appear that United Airlines and Continental are also beginning to examine whether they could merge. Should that be accomplished, some fleet consolidation would result and that would trickle down as well to the associate regional feeder airlines.

Should consolidation significantly improve the financial strength of the legacy carriers, it would facilitate and hopefully accelerate their fleet renewal. It should be remembered that those carriers have the oldest fleets of any of the major international airlines.

Whether the ongoing economic slowdown in the U.S. will be of relatively short duration or will further deteriorate into a fully fledged recession is still unclear at this time.

Equally unclear is whether this U.S. economic situation will have a significant impact elsewhere in the world. Thus far, despite the fact that Canada sends more than 85% of its exports to the U.S., the impact has not been significant.

Given the huge volume of its exports of consumer goods to North America, China could be the most exposed to a U.S. recession. Other regions of Asia such as the Indian Sub-continent, as well as Russia, and Latin America may not be affected significantly – but it is still too early to draw definitive conclusions.

On the regional aircraft scene, SAS is now replacing its Dash 8 Q400 with the CRJ 700/900 as a result of confidence in the Q400 having been shaken by the recent nose- landing-gear-related accidents. This is somewhat unfortunate for the Dash 8 Q400, which had been selling relatively well, given that turboprops are more fuel-efficient. There is, however, continued customer resistance to turboprops as they still have an image of being older technology by comparison to jets.

Bombardier is trying hard to convince customers that their CRJ 900 NextGen provides a significant increase in customer appeal, and although cosmetic changes have improved the cabin, they may still find it very difficult to compete against Embraer.

Embraer’s wider-body cabin has gained much customer acceptance, particularly the model 195, and the current ratio of sales between Bombardier and Embraer is likely to continue to favor Embraer by 3 to1.

Bombardier has been authorized by its Board of Directors to offer its long-awaited 110-130 seat ‘C Series’ with Pratt & Whitney engines, which should provide the fuel consumption improvement required to make the ‘C Series’ a competitive airplane. First delivery would be in 2013.

To be a winner, the ‘C Series’ must achieve at least 12-15% improvement in operating cost over existing comparable size airplanes from Airbus, Boeing and Embraer.

The new Sukhoi regional jet has yet to fly, but if it meets expectations it could also become a significant competitor in the regional jet arena.

Airbus finally managed a good start with the A380 operation early performance with Singapore Airlines. Airbus has made good use of the production delay by cleaning up the types of problems usually associated with the start of operation of a new airplane type. Singapore reports only one technical problem in three months of operation, which for any new aircraft is an excellent performance. Unfortunately, the production rate will remain very slow for at least another year, as the cabling will continue to be produced manually. However, the A380 operation at this time looks good and I believe it will meet expectations in time as the production accelerates. But unless manufacturing costs of that airplane are significantly reduced, it is doubtful that a break-even point can be reached before 550 to 600 aircraft are sold.

Airbus is most fortunate that the A320 series continues to enjoy great popularity and as such generates a good part of their revenue sources today and for some time to come. A program is underway to further improve the efficiency of the A320 series, in particular to improve the fuel consumption by 1% initially and eventually by as much as 4-5%. This will further boost that airplane’s popularity for some time to come. Airbus will not likely be in a position to develop a successor to the A320 much before the year 2020.

The A340 family has clearly been outclassed by the Boeing 777 family, both the B777-200ER and 300ER, which basically leaves Airbus with the A330 family as its main contender in the medium size twin airplane market.

With the A350 XWB still 4-5 years away, Airbus is today most vulnerable in the large twin market. As the A350 family comes on line, it will then be in a position to compete much more effectively and likely displace some of the B777s, particularly the earlier generation. However, Airbus will then again be vulnerable in the smaller twin market as they will have no answer to the B787 series.

Although the B-787 program is likely to be as much as one year late, Boeing has managed to avoid the bad publicity which Airbus faced on the A380. The delay did not affect sales, with close to 700 B787s already sold despite the fact that the airplane has yet to fly.

Assuming the airplane is successfully launched, Boeing will have achieved a very dominant position in the smaller twin market, virtually holding a monopoly in that niche.

Boeing will be in a better position than Airbus to launch a successor to the B737 series should they wish to do so, as early as the 2016-2017 timeframe.

The new technology engines and composite experience should enable these new replacements to the B737s and the A320 airplanes to achieve at least 20% improvement in operation cost. Of this, reduction in fuel consumption is expected to be a major contributor.

The continuing weakness of the US dollar coupled with the rapid growth in the wealth of corporations and of individuals in Russia, India, China and Latin America will continue to fuel demand for private and corporate jets. In addition to Bombardier, Embraer, Gulfstream, Dassault, etc. – are gearing up to meet this demand. The rapid growth of this market segment represents an important opportunity for the avionics and IFE suppliers. However, they will also contribute to increasing the congestion in air traffic control capacity as well as airports.

Environmental pressures on aviation will continue to increase the demand for more efficient engines and continue to accelerate the search for less polluting types of fuel, some of which are being tested at this moment.

The recent signing of an air bilateral agreement between Europe, Canada and the U.S. could provide an additional boost to the traffic growth over the North Atlantic and will encourage additional liberalization of air markets around the world along the lines of this significant breakthrough in air bilaterals.

Should the world economy not deteriorate as a result of the current U.S. problem and the market takes advantage of this increased freedom, traffic growth could be sustained over the next timeframe at a higher level than is currently forecast.

In conclusion, despite some economic concerns raised by the situation in North America, some of which has spread to Europe, at least to the banking sector, I believe that one should remain reasonably optimistic on the prospects for the growth of commercial aviation over the next timeframe. The areas of healthy growth are likely to remain the Gulf, China, Southeast Asia – particularly India – and Latin America. It is entirely possible that the strength of their economies may this time largely cushion them from the current U.S. economic problems.