Saturday 25 July 2009

International Civil & Commercial Aviation: - Fate & Prospect


The aviation industry will continuously witness tremendous growth and development in various fronts, leaning towards complete liberalization and full maturity. The air transport industry will advance doggedly into the competitive environment. Market and competitive strategies will progressively be developed to match consumer satisfaction. Prof. Henri Wassenbergh had earlier asserted that “the demand of international air traffic services has since changed…to an era of open skies, liberalization, common markets and regulated competition”. I concur that liberalization in the future will expand in all fronts including but not limited to economic, technological, anti-trust/competition law, health, safety, security and environmental factors which have all been major key players in the growth and continuing development of International as well as national civil aviation. Ruwantissa Abeyratne upholds that “the issue of competition will ensure the increasing influence of global alliances and partnerships between carriers as a key element to the industry strategic development”. Again, I agree with Abeyratne's assertion and add that the airline industry in the future will witness further efficient co operations and profitable alliance strategies aiming towards globalization, internationalization and multinationalization.
In the coming years, I forecast ownership and control clauses being gradually down played and eventually eradicated to ensure an efficient boundariless freedom and partnership thus ushering civil aviation to the next level of complete liberalization and full maturity.
Strategic alliances will be further developed and will help in reduced operational cost, shorter travel time, optimized airport and terminal use, more travel routes and a choice in departure time.

The future will also witness technological creativity and innovations in the design of aircrafts and or aircraft engines including airports and aviation infrastructure. Boeing in retaliation to Airbus A-380, A-320 and A-350 aircraft is building a 767- Dream liner passenger plane with fewer gas emission and low fuel consumption. Noiseless aircrafts will already improve environmental aspects of International commercial aviation.
The use of alternative fuel would be the way forward for the air industry in the next century. The A-380 became the first commercial plane to use alternative fuel on a three hour test flight from Filton in England to Toulouse in France in February 2008. It is expected that alternative fuel will bring about the desired cost reduction and reduced environmental impact.
In the future more airports will be built with a rather sophisticated, technical and user-conscious infrastructure ushering in an era of low-cost and major airports choice. Privatization and commercialization of airports and air traffic services will increase and become full-blown.
Military, private, major and secondary airport will emerge in the future with a choice option to passengers.
Taxes and charges will increase in the future due to overhead and operational cost. ICAO has tried to discourage its State members from tax regimes which guarantee high cost. ICAO does not support taxes but approves cost based charges. Charges are fundamentally different from taxes in that they must be based on the cost of providing an airport or air navigation service or facility and the related cost must be directly attributable to the operator. Consumers are usually made to pay for such resultant tax. The effect for the future is that extra tax or cost will always be transferred to the passengers. This will be a rather dangerous development as flight cost will increase thereby drastically reducing the number of passengers who will patronize multi-modal transport.

Emission Trading is addressed exhaustively by the Kyoto Protocol It is believed that this will help the airlines in the future to improve on their fleet, enhance higher standards in terms of quality of aircraft and improve environmental practices.
The future of aviation will be crowded with myriads of legislation for the safety and security of air transport including Competition and anti-trust law regulations.

Today, the issue of aviation terrorism insurance regulation is no longer news. The OECD after 9/11 in its communiqué recognized the need for insurance cover on terrorism risk whereas the United States enacted the Terrorism Risk Insurance Act, 2002 (TRIA). Europe’s response came by the mandatory insurance requirement for airlines which came into force on the 30th of April 2005 by virtue of Council Regulation 785/2004.

In the future new regulations will be needed to cater for new and novel aviation health incidents. While Organizations like the WHO continue to combat prevention of diseases by quarantine regulations one cannot quickly dismiss the SARS crisis and the Avian Influenza that has visited civil aviation. Article 14 of the Chicago convention may be inadequate to deal with emerging future health trend in aviation.

The threat to aviation is real, dirty bombs and other deleterious weapons including chemical, biological, radioactive contamination will continue to be employed by disgruntled elements in pursuit of their objectives- according to a report by International Union of Aviation Insurers (IUAI) at the ICAO Assembly.
The future will witness the need for a regional and or harmonized air traffic management system including, human-machine-interface(HMI), e-strategy that will be vigorously adopted to fully augment information technology.
On the environmental front, steps will be taken by aviation players - regulators, operators and manufacturers to reduce aircraft noise, pollution and aircraft engine emissions.
On aviation safety, twenty-first century scientific identification technology and detectors will emerge with a renewed push for states to integrate aviation security as part of new global responsibility.
Finally, the era of competition amongst airlines is since gone. Strategy will remain the modern way to achieve competitive advantage including integrating performance management philosophy into all cadre of management to enhance optimum profitability.

- Imoh Thompson Umoetuk

Thursday 12 March 2009

Seamless Contract Management

Contract Management has since evolved from a mere tactical or administrative task to a core strategic role which businesses must leverage to enhance competitive advantage.