Ministry of Finance

Speech by Mr Tharman Shanmugaratnam, Deputy Prime Minister & Minister for Finance & Manpower, at the 67TH International Air Transport Association AGM and World Air Transport Summit

Press release   •   Jun 07, 2011 09:02 +08

The Evolution of Air Transport

1.May I first welcome all our foreign delegates and friends to Singapore. We are honoured to host the IATA Annual General Meeting (AGM) and World Air Transport Summit once again.

2.This year is especially significant for Singapore’s aviation industry, as we celebrate 100 years of aviation this year. It is not a well-known fact, but aviation history was made in Singapore a century ago when a British Bristol Boxkite biplane took off from the island. No one could have expected then that this would set in motion a movement that has led to aviation becoming a cornerstone of Singapore’s economy.

3.Aviation has indeed mirrored the globalisation of the modern world. The air transport sector has had to adapt to momentous changes in just the last 20 years - including the emergence of the developing world as the driving force of the world economy, advancements in technology and a more competitive landscape almost everywhere.

4.IATA has been an effective champion for this constant evolution. When Singapore last hosted the IATA AGM in 2004, IATA took the historic decision to move to 100 per cent e-ticketing globally. This is now a mainstay of today’s air travel. Likewise, this year’s meeting is expected to be a decisive one for IATA and the international aviation community. Important recommendations from the “Vision 2050” meeting held in February this year will be presented during this AGM.

Challenges and Opportunities Ahead

5.There is no lack of challenges facing the industry. Pandemics, natural disasters, political upheavals and sharp economic cycles are now regular occurrences, more frequent than in any previous decade since the war. Climate change looms as a longer term challenge. There are also supply side tests - such volatile and escalating fuel prices, competition for human capital, the challenge of ensuring stable labour-management relations, as well as questions over the ability of airport and air navigation infrastructures to keep pace with the projected growth in air traffic.

6.The aviation sector’s adaptability will therefore be under more frequent and more severe test. The most important strategic response of governments and industry to this challenging environment must be to work together to remove measures and practices that impede fair competition. To do otherwise would be short-sighted. We should also guard against well-intended actions that can lead to unintended market distortions.

7.To take just one example, in addressing climate change, we should harmonise measures at an international level so as to ensure a level playing field for all, as well as minimise multiple cost layers from unilateral localised emissions trading schemes and environmental taxes. Such coordinated efforts will ultimately yield more efficient outcomes for all stakeholders and allow the industry to grow in an environmentally sustainable manner.

8.Despite the multitude of challenges, there is much the industry can look forward to. This includes the rapidly increasing demand for air travel in the emerging world, and the underlying expansion of trade and cross-border investments that exceeds the growth of the world economy. Globalisation, in other words, is still on a secular uptrend. We must all position ourselves to support and take advantage of these underlying positive trends.

Singapore’s Commitment to Air Transport Development

9.The Singapore Government, on its part, is committed to providing an environment with minimal regulatory and cost burdens on airlines, so that the industry can remain cost-efficient and grow. We are also committed to avoiding and removing market barriers. This is reflected in our pursuit of a liberal aviation policy, such as in concluding bilateral Open Skies Agreements with over 40 countries to date. At the multilateral level, we have also worked closely with our ASEAN partners to bring about air services liberalisation within the region, as well as with ASEAN’s key dialogue partners such as China and India.

10.The Government also seeks to foster a supportive environment for innovations in international transport. An example of this was in the close consultations to develop provisional rules for the first ultra-long range flights in the form of non-stop connections between Singapore and points in North America in 2004. The pilots’ association, airline management and the Civil Aviation Authority of Singapore (CAAS) were deeply involved, guided by a scientific approach and assisted by other aviation authorities and scientific agencies. These rules have gone on to shape international standards on flight time limitations for air crew.

11.Singapore is also fully supportive of IATA’s e-freight initiative which aims to replace paper documentation in the air cargo supply chain with electronic messaging. We believe that this will improve efficiency, reliability and transparency in the air cargo industry, while reducing costs throughout the supply chain. We look forward to working with IATA in the implementation of this initiative in Singapore.

12.We have also collaborated with IATA and our partners in the neighbourhood in the region-wide effort to implement Automatic Dependent System-Broadcast (ADS-B). This system, by connecting the aircraft navigation information with ground control centres, will enhance the safety and efficiency of flights operating over the South China Sea region - by improving surveillance, increasing route capacity and reducing fuel costs for airlines.

13.Singapore will continue to play a pro-active role in international and regional air traffic management initiatives to help airlines achieve operating cost savings. In addition to harmonization of air traffic management standards and procedures, we will work with our bilateral partners, airlines and international organizations to harness technology to enhance operational and fuel efficiency, so as to deliver benefits to both airlines and the environment.

Singapore’s Partnership with IATA

14.Singapore is very pleased to have a growing partnership with IATA. We appreciate IATA’s invaluable role in engaging governments on behalf of the airline community, and advocating safe, secure and efficient operations among its members. You can count on our support in the years to come.

15.IATA’s Asia-Pacific Regional Headquarters in Singapore plays an important role in strengthening partnerships amongst all players in the industry. We are also committed to working with IATA in developing Singapore as a key training base for the development of tomorrow’s aviation industry leaders. Amongst other initiatives, IATA and Singapore’s Nanyang Technological University have signed an MOU to support human capital development for the aviation industry, and have also established the Sir William Hildred and Guenter Eser Aviation Scholarships. I am sure these collaborations will contribute to nurturing quality leaders for the aviation world of tomorrow.

Concluding Remarks

16.This excellent partnership between Singapore and IATA would not have been possible without the visionary leadership of IATA Director General and CEO, Mr Giovanni Bisignani. Giovanni has been a dedicated leader and servant of the international air transport industry. On behalf of all aviation stakeholders in Singapore, I wish Giovanni well in his future endeavours. But we are assured too that he will be leaving IATA in the strong and experienced hands of Mr Tony Tyler.

17.In concluding, let me express our confidence that IATA and the air transport industry will be able to meet the challenges confronting all of us, and seize the opportunities presented by a globalising world. I wish all delegates a successful and fruitful meeting.