IATA Chair Offers Ideas to Get Government Out of 'Playing-Field
"Bold changes are needed to ensure the long-term
financial sustainability of the air transport industry," said IATA
Director General and CEO Giovanni Bisignani (right) at the opening
Monday of the 59th Annual General Meeting (AGM) of IATA in
The successive impact of September 11, a world economic slowdown
and SARS has been devastating. Industry losses in 2001 and 2002
amounted to US$25 billion. Bisignani characterized the last two
years as being like "a boxer who gets hit harder after every
Bisignani noted that the industry is fighting back with change.
The industry is re-inventing itself with cost reductions and
efficiency gains. But this is not enough. Bisignani outlined the
next steps in the industry's fight for survival which include a new
approach to labor relations and a new role for governments outlined
in the Washington Declaration adopted by member airlines at the
Basic Economics to Guide Labor Relations
cannot remain immune from the change in cost structure needed by
the industry. Cost reduction has seen industry employees accept
wage cuts in addition to the painful loss of over 400,000 jobs.
"This is an opportunity for our pilot colleagues to work with
management to safeguard this industry," said Bisignani. Pilots must
"not hide behind old work rules, such as seniority lists, which are
out of touch with today's competitive world. The industry needs to
reward performance, not age or seniority," said Bisignani.
"Outdated government regulations represent the strongest
obstacles to change," said Bisignani. In the Washington
Declaration, adopted at this IATA AGM, IATA Member airlines called
upon governments to help them ensure a sustainable future for
international air transport.
The Declaration outlines six measures needed to foster
- Liberalization of ownership rules to allow airlines access to
global capital markets
- Economic regulation of airport and air traffic services (ATS)
providers to eliminate monopoly practices
- Increased cooperation and standardization between national
- Government restraint in imposing discriminatory taxes and fees
on the aviation industry
- Protecting consumer interests served by industry
standardization from unilateral government measures
- Governments assume their responsibility for security and the
International air transport is governed by the 1944 Chicago
Convention. Bisignani said that "the bilateral system, national
ownership rules and the attitude of competition authorities are the
three pillars of stagnation in international air transport. There
is no need to bring these down, but there is a need to modernize
"The key questions are: what should be regulated
and how much? Safety and security definitely must be regulated but
commercial regulation established in the era of DC-3s is
clearly outdated," said Bisignani.
Specifically, Bisignani said that IATA supports regional
liberalization as a step towards "wide open skies" and a
competition regulatory framework that will allow for consolidation.
Further IATA supports liberalization of national ownership and
control laws, where feasible, to give airlines the freedom to
merge, acquire and go to international financial markets.
While airlines operate in a commercial competitive environment,
airports and air traffic service providers are monopolies who
account for US$40 billion of airline costs. "Many airports and ATS
providers have been good partners but the real issue remains
inadequate economic regulation and accountability. Running an
airport cannot be the licence to print money that some monopoly
service providers believe they have been granted. The industry
cannot afford to continue to support 20% average profit margins for
airports and ATS providers," said Bisignani.
Call To Action
"We cannot sit back and wait for better times. Air
transport must continue to fulfil its role as an engine for global
economic growth, and providing jobs to over 1.7 million people
around the world. The airlines have adapted to the new
circumstances. It is now time for their partners and the
governments to do the same," concluded Bisignani.