eu- arab world aviation conference muscat, oman, 20-21...

EUEU-- ARAB WORLD AVIATION ARAB WORLD AVIATION CONFERENCE CONFERENCE

Muscat, Oman, 20Muscat, Oman, 20--21 October 200921 October 2009

Agenda for FreedomAgenda for Freedom

0

1

2

3

4

5

6

7

8

9

10

1993 1995 1997 1999 2001 2003 2005 2007 2009

% in

vest

ed c

apita

l

Airlines average cost of capital

Airlines return on capitalLoss of investor capital

Revenues set to fall 15% or $80 billion

Source: IATA

-20

-15

-10

-5

0

5

10

15

20

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

F

% G

row

thYo

Y

Global Airline Revenue

Passenger RPKs

Industry losses to continue into 2010

Source: ICAO, IATA

Global commercial airline profitability

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.019

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

F

2010

F

% in

vest

ed c

apita

l

-20

-15

-10

-5

0

5

10

15

20

US

$ bi

llion

Net losses(right scale)

Return on invested capital (left scale)

The problem is not with business modelsAirline returns on invested capital (ROIC)

0

1

2

3

4

5

6

7

8

NetworkAirlines

LCCs NetworkAirlines

LCCs NetworkAirlines

LCCs

Total US Europe

% in

vest

ed c

apita

l

Average cost of capital/ target ROIC

The problem is not geography

Airline returns on invested capital (ROIC)

0

1

2

3

4

5

6

7

8

Total US Europe Asia

% in

vest

ed c

apita

l

1996-2000 2001-2004 Cost of Capital

Average cost of capital/ target ROIC

The problem is not

The Chicago Convention

But 3.500 bilateral agreements contain barriers to freedom

3.500 bilateral agreements contain barriers to freedom:

1. Freedom to access capital markets

…is not really French

Orange runs telecoms in…

Resolutely British ?

Flags or Brands?

3.500 bilateral agreements contain barriers to freedom:

2. Freedom to do business

3.500 bilateral agreements contain barriers to freedom:

3. Freedom to price services

Mechanisms for change

Unilateral Waiver

Multilateral agreement/ treaty

Third way: multilateral statement of policy principles: the approach chosen for the Agenda for Freedom

Agenda for freedom: the steps

First Summit: Istanbul - October 2008

Next Summit Critical mass of signatures (Canada –mid November)