IATA calls for liberalization in the Airline Industry

The war in Iraq comes at a time when the airlines, having accumulated $30 billion of losses since 9/11, are still struggling with the effects of the worst crisis in the history of the industry IATA has said.

The armed conflict could easily add $10 billion dollars of losses on international traffic by extending the current traffic slump well into the summer season.

"At this point, the air transport industry must look beyond the horizon and re-invent itself," said Giovanni Bisignani, IATA Director General and CEO, speaking in Montreal, at the seminar opening the ICAO (International Civil Aviation Organization) ATC5 Conference.

"Our industry needs change. Government regulation keeps our industry from changing. This ICAO conference may well represent the last chance to  set our industry on the right regulatory track," Bisignani stressed.

IATA identified three obstacles to the change the industry needs: the bilateral system, national ownership rules and the attitude of competition authorities. These are the three pillars of stagnation.

In a number of position papers presented to the ICAO Conference, IATA outlines the measures that the airlines propose in order to bring about the changes the industry requires.

"Bilateralism should evolve into a regional system with the merger of the single markets. While the North Atlantic could be the starting point in seeking a new way, we call on all like-minded governments to begin the modernization of the bilateral system," Bisignani continued.

"Airlines should be free to merge and approach the international financial markets for capital. The wave of globalization must eliminate national ownership limits wherever they represent an obstacle to development.  These limits are denying airlines the freedom of action given to all other businesses," Bisignani added.

IATA is well aware that for many developing countries, a national airline may be considered an attribute of sovereignty and a necessary asset for its  economic development.

"Some states may wish to keep a "golden share" to make sure their national interests are taken into account. Fine! We simply ask these states not to  create obstacles for those who wish to liberalize further," Bisignani pointed out.

Dogmatic competition policies combined with a lack of understanding of how air transport operates on the part of the competition authorities also  restrict the airlines' freedom to cooperate or to merge.

"What other global business is more fragmented than air transport?" Bisignani asked in Montreal. "We need the economies of scales that mergers or acquisitions can provide with the proper competition supervision. The regulators must take up the challenge of change!" Bisignani concluded.