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AIRLINES ASSOCIATION OF SOUTHERN AFRICA 45th Annual General Assembly 2015

CHIEF EXECUTIVE’S ANNUAL REPORT

FANCOURT HOTEL, GEORGE, WESTERN CAPE

10 OCTOBER 2015

PRESENTED BY :Chris Zweigenthal

Chief Executive

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INTRODUCTION

• 2015 : Continued recovery: • Global profitability US$ 29 billion up from US$16.4 billion• Africa constant at +$100 million • Global industry pax growth : 5% to 6% p.a.• Africa and Southern Africa pax growth : 4% p.a.• South Africa : 3% growth p.a

• Domestic : 7% p.a; International at -2%.• Entry of two new airlines : FlySafair and Skywise Airlines

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AASA CORPORATE DEV.• EXECUTIVE COMMITTEEo Chairperson : Mr Erik Ventero Deputy Chairperson : Mr Inati Ntshangao Mr Rodger Fostero Ms Thuli Mpsheo Mr Nico Bezuidenhouto Mr Ben Dahwao Mr Vees Lochano Mr Chris Zweigenthal

• AASA STAFF COMPLIMENTo Chris Zweigenthal – CEOo Vees Lochan – COOo Ms Pam Roux – Bookkeepero Ms Celeste Breedt – Admin Officero Ms Alice Saule – Office Assistant

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AASA CORPORATE DEV.

• MEMBERSHIP

o 20 Airline Memberso New Member : Skywise Airlines

o 27 Associate Memberso New Member : Hahn Air, Swissport

• BBBEE ACCREDITATION :• Level 3 contributor• Vees Lochan : Member (alternate) of the Transport BBBEE Council

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ECONOMIC REGULATION• REVIEW OF REGULATORY PROCESS

• Draft ACSA and ATNS amendment Bills • Chief State Law Advisor comment received • Work to incorporate further comment and prepare for

publication and comment • Funding Model discussion outstanding

• Current model and legislation for new Permission

• PERMISSION PROCESS• 1 April 2015 : Zero % increase in tariffs• 30 June 2015 : ACSA and ATNS submit Applications• 8 May 2015 : Draft Permission – much discussion • 1 October 2015 : Planned Permission implementation date• Await final Permission from Regulator following Ministerial

approval.

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AIRPORTS COMPANY SA• PERMISSION PROCESS

• Substantive consensus on CAPEX projects between stakeholders

• Regulator position is to curtail CAPEX by over 50% • Await final Permission to see tariff amendments and

CAPEX amounts

• WORK IN MANY OTHER AREAS• Operational environment (AMC), Security, Fuel• Airline Association Liaison Committee meetings• Hand Baggage Policy • Proposed amendments dealing with passengers with

disability

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ATNS

• PERMISSION PROCESS• Follows same program as ACSA – await final Permission• Substantive Agreement on CAPEX between stakeholders • Regulator has curtailed CAPEX

• OPERATIONS• Slot Coordination• Performance Based Navigation and associated ATS

improvements• USTDA Capacity Study

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SAWS

• SAWS tariff consultations• Increase in tariff by 12% on 1 April 2015• Consultations to commence on tariffs effective

1 April 2015• ACAMS meetings

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AFRICAN AEROPOLITICS• SADC Civil Aviation Committee

• YD Implementation – Single African Aviation market AU Working Committee – AASA support to process

• Representative of airlines on all issues • COSCAP• SASO – HQ in Swaziland. • UAMC – Security Concerns hinderingimplementation.

• EU operating ban• Mozambique, DRC, Zambia still on list

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DEPARTMENT OF TRANSPORT

• Airlift Strategy• National Civil Aviation Policy• National Airport Development Plan• Slot Coordination Committee• ICAO State Letter comment and input• National Facilitation Committee participation• B-BBEE – Aviation Working Group – Aviation Charter• Secretariat to Regulating Committee• Cape Town Convention

• Liaison with DOT as lead Department

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SA CAA

• CARCOM• Participation on Committee and Sub-Committees

• NASCOM

• FINANCE• Consultation on CAA Safety charge.

• AVSEC FORUM

• CAA Industry Liaison Forum

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JET FUEL

• Logistics and Security of Supply to ORTIA• Dealing with temporary stock shortage July / August 2015• Strategic Plan for Transnet (pipeline and rail)• Address NMPP future for jet

• Cape Town • Discussion on long term transport to CPT – pipeline option• Additional 2 tanks at CPT – postponed to 2018

• BFP – jet fuel not regulated – no official published BFP

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DEPARTMENT OF HOME AFFAIRS

• New Immigration Regulations – 26 May 2014• Unabridged birth certificate for children – impl. 1 June 2015• Biometric visa application in person at foreign missions

• Involvement with 2 TBCSA study on impact of new Regulations

• Meeting with IATA and Minister of Home Affairs – Aug 2015

• President Zuma :• SONA February 2015 announced review of the Regulations• Interministerial Task Team

• Unfortunate standoff that needs to be resolved in interests of all parties

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ENVIRONMENT• GLOBAL INITIATIVES

• Work with and support IATA work on development of global MBM’s in preparation for 2016 ICAO Assembly

• SOUTH AFRICAN INITIATIVES• DOT / DEA Stakeholder Committees• IATA regional workshop – 13 October 2015

• AASA Environmental committee – launch January 2016• Carbon Taxes proposal by National Treasury

• International – postponed awaiting ICAO solution• Domestic – implementation 2016 – AASA objection

• Cost of R111 million per annum for domestic airlines.

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HUMAN RESOURCES

• MANCOM OF AEROSPACE CHAMBER – TETA• Representation on Committee by Comair (primary) and

SAA (alternate rep)

• AASA TRANSFORMATION PROGRAM• Training and Development program• 475 airline staff through program• Customer Care and Commercial Aviation Management

• WONDERS OF AVIATION – the magic of flight inspiration program to stimulate interest in aviation.

• Parnership with Airlines, Industry Associations, Partners

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LEGAL• CAPE TOWN CONVENTION

• Unfortunately slow progress• Draft Amendments to legislation and Regulations have

been drawn up. Meetings with DOT to still take place• Contact made with International Aviation Working Group

with offers of assistance.

• 3D SECURE FOR MERCHANTS• Liaison with PASA – threat of penalties for non compliance• Shown PASA risks of implementation – PASA backed off.• Issues still to be resolved on capacity of Acquiring Banks to

implement airline sales quantities.

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LEGAL

• CONSUMER PROTECTION ACT• Airlines dealing satisfactorily with resolution of claimrs• Draft Industry Code preparation – under further review.• Further discussions with Airlines are necessary to discuss

Code options• AASA and BARSA being used as intermediates for referral

of difficult cases to Senior Executives for resolution – successful implementation.

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TOURISM

• TBCSA – representation On Board

• Liaison with the Ministry and Department of Tourism

• Representative of TBCSA on NTSS Task Group for implementation

• Part of NTSS Review process.

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TRANSFORMATION• Strategic imperative for airline industry

• Participation on DOT Transformation Letsema Rountables

• Part of Aviation Working Group in consultations with DOT together with Domestic Airlines and interested stakeholders on development of new Aviation Charter to align with New Codes of Good Practice

• Aviation Charter to be gazetted by 31 October 2015. • Outstanding issues to be addressed during 60 day comment period

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ACS• GENERAL

• Formal agreement with ACSA outstanding - under discussion with ACSA, CAA, DOT• HBS

• Provision at all ACSA Airports and 4 non ACSA airports• ACSA and CAA working relationship essential• New project for improved standards

• BRS • Progressing well

• CUTE AND CUSS• Award of new contract to SITA – partnership with ACSA• Support of IATA Fast Travel Passenger Experience project

• CARGO SCREENING• Contract with AFS

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MEDICAL MATTERS

• PASSENGERS TRAVELLING WITH DISABILITY• Consultations with Associations representing persons

with disability• Drafting of amendments to Regulations in Part 91• Proposal to be submitted to CAA through CARCOM

process • consultations with all Associations representing persons

with disability

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AASA STANDING COMMITTEES

• STANDING COMMITTEE ON SAFETY• Forum for sharing and creating awareness of safety issues

and requirements

• HUMAN RESOURCE TRAINING• Forum for airline HR practitioners to coordinate shared

initiatives for skills development e.g TETA

• ENVIRONMENTAL COMMITTEE (being convened Jan 2016)• Initiatives to reduce GHGE• Programs to support MBM’s• Coordination of Southern African initiatives

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INDUSTRY INVOLVEMENT• IATA• REGIONAL AIRLINE ASSOCIATIONS• BARSA• CAASA, • Aero Club of South Africa, • RAASA• TBCSA – Board Member• ASATA• SATSA, • FEDHASA, • SAVRALA, • CORPORATES

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GENERAL

• MEDIA• Profile in print, radio and television• Conferences – attendance and speaking engagements

• REGIONAL ISSUES• AASA available on request to assist• Initiation required from Member Airlines to address

protocol• Area for potential growth of AASA involvement.

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CONCLUSION

MY THANKS TO :

• THE AASA TEAM AND FAMILIES• BUHLE MARAIS

• AASA EXECUTIVE COMMITTEE

• MEMBERS, PARTNERS, STAKEHOLDERS, GOVERNMENT DEPARTMENTS, INDUSTRY COLLEAGUES

• TO 2016 !!!

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THANK YOU !!!………….. To everyone