CEO interview - FedEx president and CEO looks for friends in high places
Tuesday, October 12, 2010
FedEx Express President and CEO, and Chairman of the IATA Board of Governors, David Bronczek, says aviation must get governments onside if the industry is to enjoy a sustainable future.
What do you hope to achieve during your chairmanship of IATA?
First, let me say it’s a privilege to be chosen as Chairman for the next year. It’s unusual for somebody from the cargo industry to be handed the role, but it does bring a fresh perspective. In air freight, we are used to pulling different people and disciplines together to achieve a common goal. That experience should be vital in the year ahead.
Safety is still the number one priority—as it always should be. And we have some major environmental debates coming up at the International Civil Aviation Organization (ICAO) Assembly and the United Nations Framework for Climate Change Convention’s (UNFCCC) Conference of the Parties (COP-16). It’s important we make progress in both arenas. I will also be looking closely at Simplifying the Business (StB) as this has enormous potential. It is a real driving force behind the sustainability of the industry.
I will also have another vital role to play—that of helping to find the successor to the current IATA Director General. With Giovanni Bisignani stepping down next June, we add one more challenge to the year ahead. I will take my responsibility to help find his replacement very seriously.
It’s crucial that IATA continues to improve its relevance to the industry. The next 12 months will be tough but it is also an opportunity to increase IATA’s standing.
You've noted a focus on Simplifying The Business. From a cargo perspective, what difference has e-freight made?
E-freight is absolutely critical from a strategic viewpoint. The cargo industry was heavily reliant on paper, and it was clear that we could no longer work like that.
The point for non-cargo people to understand is the incredible complexity of air freight. There are more people and more rules involved than the passenger side. E-freight has slowly but surely made cargo increasingly efficient through the use of technology. This wasn’t a small battle, and the achievements so far should not be underestimated. Of course, we can always improve, and we must strive to be more efficient and productive. But e-freight has given us a great start.
Technology will also play a vital role in other areas of cargo—for example in screening. At FedEx, we have made a great deal of progress in a number of areas, thanks to new technology and processes. We’re raising the bar across the industry.
Will aviation ever win the environmental battle in the eyes of governments and the public?
Despite a lot of hard work so far, it is clear that we must further raise the profile of aviation in the eyes of government. Taxes are still being imposed under a green guise so it is clear governments still don’t understand the big picture.
Aviation is an economic powerhouse. It is vital to economic well-being at the national, regional and global level. And this is without mentioning its social and cultural roles, allowing people to interact and visit friends and family.
At the same time, air transport has made enormous progress on environmental issues. All airlines—from the US to Africa, from large airlines to small—are unified in some truly ambitious goals. Believe me, that takes some hard work. And we are still driving forward. New engines and biofuels will deliver some significant results, for example.
So we are working aggressively on things under our control but we need government cooperation to allow us to go further. In the US, NextGen will allow a continuous descent approach into New York JFK. That would make a big difference to reduce fuel consumption and CO2 emissions.
We’re ready to take advantage of NextGen, just as carriers in Europe could take advantage of the Single European Sky (SES) and SES ATM Research (SESAR) technology. You put these elements together with the progress so far and the self-imposed targets and you have the world’s leading industry when it comes to environmental measures.
We need to make this point. And we need to establish that ICAO is the right channel for aviation’s environmental debate. And we need to be tough saying that taxes are not the way to deal with aviation and the environment. At the moment, airlines are needlessly losing money, governments are losing money too—look at the repeal of the Dutch tax—and the environment isn’t benefiting because the money never gets allocated correctly.
Are cargo carriers playing their part in environmental matters, or could more be done—perhaps in terms of new aircraft?
There’s no doubt cargo carriers could do more. And new aircraft is a very obvious example. At FedEx, we have begun transitioning our international fleet with environmentally friendly Boeing 777 Freighters. These state-of-the-art aircraft burn less fuel and produce much lower emissions than the aircraft they will replace. The move to Boeing 757s from Boeing 727s is even more pronounced and will give us something in the region of 46% savings in fuel. Plenty of other cargo airlines are doing the same thing. The old converted aircraft are slowly dying out and more fuel-efficient aircraft coming in.
But there’s more to it, as well. As I mentioned, cargo is a complex industry and we can’t look at just one aspect of operations. At our new hub in Cologne, Germany and in California too, we have solar panels supplying some of the power to our facilities. We are rolling out new electric vehicles. They are already in place in London, for example.
Similar initiatives are taking place at many other cargo facilities. There is a lot to be done, but let’s also not forget that there is a lot being done already.
Implementing and harmonizing Nextgen and SESAR are vital. Are governments moving quickly enough and is enough being done to ensure harmonization?
We must have the two systems harmonized, and we must move as quickly as possible. The efficiency and the profitability of a large section of this industry are dependent on these two systems. There are big savings available in terms of time, money, fuel and CO2.
Governments do understand the need for progress. We have been meeting regularly with officials at the White House, and they do understand that the payback for NextGen is significant. The problem is the initial funding is equally significant, and this is a challenge in the current climate.
Improving airspace usage—and in particular implementing and harmonizing these two major systems—is a priority for IATA, for FedEx, and for pretty much everybody else with a vested interest. The payback is there. We just have to continue stressing this, and make the point absolutely clear to governments.
Security measures need to be overhauled. What should be done?
Airlines have met with US Department of Homeland Security Janet Napolitano several times since she took office. Progress is being made, but it is essential we get this right. You can’t have disparate or weak systems at any point because a passenger can enter the air transport network anywhere. Just one weakness could be exploited. This means it is essential we share technology and expertise. And it is also essential we share passenger information among governments and airlines in an efficient and timely manner.
The security process is not wrong. It’s just that we must do a better job at identifying higher risks earlier. This is an important issue, not only because we are talking about security in the skies but also because we are talking about the sustainability of the industry. People want to feel secure when they travel. And they want a hassle-free experience. We can, and must, give them both. They are not mutually exclusive.
How should the airline-airport relationship develop? Are airports doing enough?
There are some great airports out there. My home airport, Memphis, does an outstanding job and there are others too, like Charlotte Douglas, North Carolina, that won the IATA Eagle Award recently. Airports can understand airline needs and they can satisfy airline needs.
It’s true there are far more airports that don’t get it right. They chase profits without realizing they are damaging the long-term viability of the industry. Basically, airports make money and airlines don’t. Clearly that can’t continue or there won’t be an industry for airports to serve. The relationship between airlines and airports must be win-win. The individual efforts of airports like Memphis must be translated on to the global stage.
How do you view IATA’s Vision 2050?
You always need to have a vision. And it should be ambitious. When we look to solve some of the issues confronting airlines today, we are really working toward achieving a vision of a profitable, efficient future.
It’s a bit like President Kennedy and his dream of putting a man on the moon within a set timeframe. Neil Armstrong rightly received the Global Aviation Leadership Award at this year’s IATA AGM because he is proof that visions can come to pass.
And we’re already seeing progress across all areas. StB is putting the customer first, biofuels have been successfully tested and can drive the engines of today, and infrastructure is changing to meet airline needs. As for profitability—well, we haven’t made much money yet, but I’m confident we will.
Airlines don't do well at external advocacy. How can the industry influence governments?
Aviation is a great story. We simply have to tell it, and tell it well.
The industry has helped the world to achieve greater prosperity. It will continue to do so in an environmentally-friendly way. I think the message must be very succinct. The airline industry is a great tool for governments. It is a great service provider for their people and goods.
One of the problems is we have all forgotten just how incredible this industry is. A passenger or package can go from London to Hong Kong non-stop overnight. Really think about that! The industry makes a positive difference to this world, and governments should look at us in this light.
Maybe we need to devote more resources to this area, and maybe we need a more formal approach. After all, we’re not trying to be persuasive as such. Our argument isn’t tenuous. We’re simply trying to get governments to see the reality.
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Original article source here.