Oct 30, 2008

Address to Aviation Outlook Asia Conference

Address to Aviation Outlook Asia Conference

October 30 2008, Singapore

The Hon Anthony Albanese MP

Minister for Infrastructure, Transport,

Regional Development and Local Government,

Leader of the House,

Federal Member for Grayndler

When Australian Prime Minister Kevin Rudd visited these shores in August to deliver the Singapore Lecture, he spoke of the strong relationship between our two countries, our common economic interests, and the historic ties that bind us.

It is an honour to build on this relationship today, and deliver the keynote address at the Aviation Outlook Asia Conference.

On current forecasts, in 20 years time, there will be more than a doubling of current aircraft fleets with new generation Boeing 787 and Airbus A380 and A350 jets becoming the norm, not the exception. Some time in the next decade this region will take over from Europe and the USA as the largest aviation market in the world

During his address in August, the Prime Minister talked about the pace of economic and demographic change occurring in the Asia Pacific region, and posed his audience a challenge which I’d like to share with you today. He said that governments have a responsibility to think about the future, and to plan for it. Either we shape the future, or the future shapes us.

In short, we must keep ahead of the game. The Australian Government understands the importance of this, which is why we have acted swiftly and decisively in the face of the global economic storm sweeping world markets.

The current economic climate

Earlier this month, our Prime Minister Kevin Rudd announced a $10 billion Economic Security Strategy to strengthen the Australian economy. We are also working with our international colleagues to do everything we can to minimise the fall-out from the global credit crisis.

These global economic conditions underline the importance of governments planning ahead and preparing itself for all eventualities. It includes putting in place strategies to build sectors of the economy which are crucial to ongoing economic growth.

As an island continent, Australia depends upon the aviation industry to connect us with each other and with the world. Whether moving tourists, families, freight or business people, the aviation industry is critical to Australia’s economic development. That is why the Australian Government is developing a comprehensive national aviation strategy, which I’ll focus on today.

Growth of the industry

Before I do, I’d like to provide you with a snapshot of how our industry is travelling at this point in time.

The reforms which were put in place in the 1980’s helped strengthen the Australian aviation industry. These reforms ended the old two-airline policy, introduced new competition to the international airline sector, and privatised our national carrier Qantas.

These reforms provided the platform for significant growth over the 1980’s and 1990’s.

Australia’s aviation industry carries three times the passengers it did two decades ago. Fares are lower, services are more flexible, and we have a safety record which is second to none. Australia’s airlines have remained relatively profitable, despite high oil prices and a volatile international economy.

Australia’s first ever aviation white paper

When I became the Minister responsible for aviation late last year, I was determined to ensure that Australia developed a consolidated aviation industry plan.

Early this year, the Government started the development of a National Aviation Policy Statement. It is a three step process that started with the release in April of an Issues Paper.

Australia depends upon aviation to keep our economy strong and to keep us connected to each other and to the rest of the world

The development of a National Aviation Policy has energised the industry and many community stakeholders. We have received nearly 300 submissions, including a number from international airlines. The views expressed have been diverse and passionate.

I will release a Draft Policy Statement – or Green Paper – in the near future, launching a further period of consultation prior to the development and release of Australia’s first ever National Aviation Policy Statement next year. The Statement will provide the aviation industry with direction on a number of key challenges it faces.

Safety

At the heart of the Government’s policy will be strategies to improve safety in the aviation industry. Safety is the Government’s number one priority when it comes to aviation. Australia’s safety agencies – the Civil Aviation Safety Authority, the Australian Transport Safety Bureau and Airservices Australia – have world class reputations. It’s a record we are proud of.

If we want to maintain, and indeed enhance our reputation as having the world’s safest skies, the Australian Government understands we must continue to look at ways to improve safety.

The Draft Policy Statement will set out how the Government intends to do this, while maintaining investment and continuing on the path of further liberalisation. The development of an over-arching national policy will provide industry with much needed direction and certainty. It will also facilitate the industry’s growth through some turbulent times that lay ahead.

As a country that looks after 11 percent of the world’s airspace, we have to take advantage of new technologies to improve efficiency and safety. We need to pursue further liberalisation of our aviation markets while still pursuing opportunities for Australian carriers.

We want airports to invest in improved services for passengers and airlines, and to plan their development in consultation with local communities and other key stakeholders. And we must continue working with industry to help it manage emissions and minimise the impact on global climate change. These are all major challenges. I’d like to take a few moments to say a few words about them.

Open skies

Australia currently has some of the most liberal bilateral agreements in the world.

The Government recently negotiated an ‘open skies’ agreement with the United States and has also concluded expanded arrangements with Malaysia, Thailand and South Africa. There are also no restrictions on capacity in our agreements with New Zealand, Singapore or the United Kingdom.

Negotiations are underway on a comprehensive air services agreement with the European Union to replace the current bilateral agreements with EU Member States.

This agreement is expected to remove many, if not all, of the restrictions on services provided by Australian and European airlines between the two continents. China, India, and countries in the Asia-Pacific and South American regions are other priority markets the Australian Government would like greater access to.

The Government’s policy in regard to our air service negotiations is to secure capacity ahead of demand – an example of keeping ahead of the game. Our focus is to identify and engage in emerging markets in our region, maximise trade and tourism opportunities, and ensure airlines are able to make commercial decisions on the viability of a service.

We are committed to liberalisation, but ultimately the decisions we make in regards to access must also have regard to Australia’s national interest.

Climate change and sustainable aviation

I mentioned earlier the strong growth of the Australian aviation industry.

Airline passenger numbers are at record levels, and predicted to double over the next 20 years. This growth rate is obviously welcome, but it does pose some challenges for the industry in terms of its responsibility to explore ways to reduce its global carbon footprint.

Civil aviation currently accounts for about two percent of global emissions, and this figure is expected to rise.

Aircraft manufactures have taken great strides in recent years to put us on a more sustainable path. Newer, more efficient aircraft are producing fewer emissions than their predecessors. To illustrate, the plane you flew on to get to this Conference was probably 70 percent more efficient than those in our skies 40 years ago.

I’m pleased to say that Australia’s major airlines are at the top of the list of order books for new generation aircraft.

As well as better aircraft, we are also getting smarter with our air traffic management systems. A good example of this is flexible flight paths which can help reduce emissions. These flex-tracks, as they are commonly known, take advantage of high-altitude jet stream winds that can significantly improve an aircraft’s speed.

For example, Emirates reports using flex-tracks on a flight between Dubai and Sydney with a saving of nearly 45 minutes. That’s about eight tonnes of fuel, and a huge reduction in the aircraft’s carbon footprint.

And, as many at the Conference would know, ICAO as well as APEC are progressing practical initiatives aimed at reducing emissions from the aviation sector. It’s clear we are heading in the right direction, but more needs to be done.

Future improvements in fuel efficiency will not be enough to counteract the emissions generated by a growing industry.

We need a combination of operational and market-based measures to reduce the size of aviation’s carbon footprint. The Australian Government, along with industry, is playing its part.

The election of the Rudd Government in November last year heralded a change in course for our nation’s climate change policy. Starting with ratification of the Kyoto Protocol, we have been working since day one to put in place the frameworks necessary to tackle Australia’s climate change challenges.

At the heart of this fresh approach is a national emissions trading scheme; known as the Carbon Pollution Reduction Scheme. The Scheme will form a central component of the Government’s efforts to reduce carbon dioxide emissions by 60 percent on 2000 levels by 2050.

To put in place the best scheme possible to reduce emissions, while minimising costs to the national economy, the Australian Government is working closely with the aviation industry as part of our broader approach that involves extensive consultation with affected industries.

Airport planning issues

Perhaps the issue to attract most attention so far during consultation about the national aviation policy has been airport development and planning. In addition to advances in technology and regulatory reform, the other major change to Australia’s aviation industry in the last 20 years has been the growth of our major airports.

Australia’s major airports are our economic and social gateways to the globe. As such, our airport sites are valuable, not to mention scarce.

There have been significant investments at Australia’s airports, and more than $4 billion is expected to be spent in the near future by airports in Perth, Sydney, Brisbane and Melbourne. But some communities have expressed concerns about the broader impact these developments are having on their neighbourhoods.

Many of our major cities are growing rapidly, which means more people are being affected by noise, congestion or other effects from airport operations.

We recognise the importance of continued investment in aeronautical infrastructure at airports, and we also understand the need for development to be balanced, planned and responsible.

Conclusion

I began today by referring to the economic storms sweeping global markets. The global financial crisis has highlighted the interconnectivity of world financial systems. In many ways, the financial linkages that exist from country to country are not unlike the connections in international aviation. By its very nature aviation is the most international of industries. The destiny of our airlines is inextricably linked to the health and prosperity of the global economy.

These uncertain times call for long term planning with an eye to the future. The decisions we make today will have long term benefits for Australia’s aviation industry, and the broader Australian economy.

There is a Chinese Proverb, which says: ‘One generation plants the trees, and another gets the shade’. Through the development of Australia’s first ever National Aviation Policy Statement, we will plant the seed and encourage the growth and prosperity of Australia’s aviation industry.