IATA boss berates ‘protectionist’ industry

US-EU agreement would add US$5-bn to bottom line
ALAN PEAT
A LACK of liberalisation for the air transport sector is delaying the recovery of a sick industry, according to Giovanni Bisignani, director-general and CEO of the International Air Transport Association (IATA). “Since 2001, airlines have lost in excess of US$40-billion,” he told FTW. “The case for change and greater commercial freedoms is immediate and urgent – but the government response is disappointingly slow. Bisignani pointed to the US-EU negotiations on open skies and regulatory convergence to kick-start the liberalisation process – with the combined markets of Europe and North America accounting for over half of global aviation traffic. “An agreement would add US$5-bn to the bottom line of the industry,” he said. “It is an opportunity we cannot afford to miss. It is time to move from discussion and deliver results.” The future success of the air transport industry requires that airlines have the basic commercial freedoms to serve markets where they exist and to merge and consolidate where it makes business sense, Bisignani added. At the same time, he rejected arguments of safety and security as excuses not to liberalise. “There is no valid national security argument for national ownership rules. Why should airlines be treated differently than the strategic sectors of telecoms or banking? “What happened to the merchant marine fleet? With the exception of some coastal shipping, most countries have no national merchant marine. But this has not prohibited the delivery of goods in times of national crisis. Commercial markets have taken up the challenge. It is time to move on.” As for safety, Bisignani stated that air transport was the safest mode of transport. “The 2005 accident rate was the lowest ever at 0.76 accidents per million flights or 0.35 if you look at just IATA members. “Put together the IATA operational safety audit (IOSA) with the International Civil Aviation Organisation (ICAO) enhanced universal safety oversight programme – and the safety argument against liberalisation is history.” A recent industry study in which IATA participated quantified the spin-off effects of liberalisation by looking at 320 restricted city-pairs around the globe. The impact of liberalisation would be 63% increase in traffic, said the report, 24.1 million jobs and US$450-bn in economic activity. “That,” said Bisignani, “is the equivalent of adding an economy the size of Brazil to global commerce.” But in the current situation, liberalisation is not growing as it should. IATA research showed that over 98% of traffic was still governed by bilateral agreements – with restrictions on ownership or principal places of business. Only 1.7% of traffic operates in a liberalised environment. “There are well over 3 000 air service agreements, of which 200 account for 75% of traffic,” said Bisignani. “So changing only a few agreements can have a big impact. That is why a US-EU agreement is so important. Failing that, we will look for leadership elsewhere.” And having the vision for progressive liberalisation is not enough – there is now a need for action and speed to deliver results, according to Bisignani. “We live in the internet age and the 60-year-old rules that govern our industry are in need of a nice retirement party,” he said. “The challenge for our government leaders is to bring policy in line with the changes airlines have achieved and deliver on the leadership vision that our industry needs for the next 60 years. “There is no time to sit and wait. The world is changing – and so must air transport.”