IATA’s top official has made an urgent call for progressive liberalisation to save the airline industry.
“Failure to liberalise the air transport sector is delaying the recovery of a sick industry which has lost in excess of $40 billion since 2001,” said IATA director general and CEO Giovanni Bisignani addressing the International Civil Aviation Organisation (ICAO) Global Symposium on Air Transport Liberalisation in Dubai. “The case for change and greater commercial freedoms is immediate and urgent. But the government response is disappointingly slow,” he said.
The symposium was a follow-up to the 2003 Fifth Air Transport Conference where governments agreed to a vision of progressive liberalization.
Bisignani pointed to the US-EU negotiations on open skies and regulatory convergence to kick-start the liberalisation process.
“An agreement would add $5 billion to the bottom line of the industry. It is an opportunity we cannot afford to miss. It is time to move from discussion and deliver results,” he added. The combined markets of Europe and North America account for over half of global aviation traffic.
Bisignani rejected arguments of safety and security as excuses not to liberalise. On the security front, he said 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,” he said.
In terms of safety, Bisignani said air transport is the safest mode of transport. The 2005 accident rate was the lowest ever at 0.76 accidents per million flights or 0.35 if only IATA members were considered. “The IATA Operational Safety Audit (IOSA) is the first global standard for airline safety management and will be a condition of IATA membership from 2008. Put IOSA together with ICAO's enhanced Universal Safety Oversight Programme and the safety argument against liberalisation is history.”
Bisignani went on to argue for liberalisation to build a healthier air transport sector that delivers benefits to the consumer and broadly throughout the economy. “Liberalisation between India and the UK has seen weekly flights double to 200 in a year. Airlines are sharing the market opportunities and consumers have never had so much choice. Similarly, the Single Aviation Market in Europe saw traffic double between 1993 and 2005. Real prices for air travel dropped by a third and more people than ever are flying,” he said. “Air transport is the $450 billion heart of a value chain that supports $2.9 trillion in economic activity. A recent study led by Boeing quantified the spin-off effects of liberalisation by looking at 320 restricted city-pairs around the globe. The impact of liberalisation would be 63 per cent increase in traffic, 24.1 million jobs and $450 billion in economic activity. That is the equivalent of adding an economy the size of Brazil to global commerce.”
IATA research shows that over 98 per cent of traffic is still governed by bilateral agreements with ownership or principle place of business restrictions. Only 17 per cent of traffic operates in a liberalised environment. There are well over 3,000 air service agreements, of which 200 account for 75 per cent of traffic. “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,' said Bisignani. “We have the vision for progressive liberalisation, now we need action and speed to deliver results. We live in the internet age and the 60 year-old-rules that govern our industry are in need of a nice retirement party.”