Iata's conflicting pitches on global aviation an oratory of hot air

PUBLISHED : Tuesday, 05 August, 2003, 12:00am
UPDATED : Tuesday, 05 August, 2003, 12:00am

The International Air Transport Association (Iata) yesterday renewed its clarion call for a financial and regulatory restructuring of the global aviation industry as it tries to rise from the ashes of Asia's Sars outbreak.

Iata supremo Giovanni Bisignani gave a showcase on communications strategy and spin as he stayed on message for a full 45 minutes in front of a packed gallery of Sars-obsessed journalists and photographers.

The director-general's calls for a reassessment of the regulations governing the global aviation industry - particularly those which limit open skies and airline mergers - were scribbled down by eager scribes as quickly as Mr Bisignani could utter the catchy little platitudes.

Reminding us the airline industry was all about 'partnerships', he called on airport authorities to make permanent the temporary fee reductions most gave airlines to help them rebuild their Sars-devastated balance sheets.

Most of all, Mr Bisignani called on governments to release long-suffering carriers from the regulatory shackles that restrict their ability to react to market demand and protect themselves from cyclical downturns.

'This industry needs flexibility!' he roared late yesterday afternoon to an appreciative audience of airline executives at Aerospace Forum Asia, who were only too eager to cringe at scary tales about big bad monopolistic airport operators and their government or private-sector keepers.

It was the kind of auditory tour-de-force which could have led a battle-weary industry to the land of prosperity, if only Iata was willing to practise what it preaches.

While Mr Bisignani was trumpeting calls in Hong Kong for greater freedom that would have made Martin Luther King proud, on the other side of the planet, in Washington, Iata was trying to subvert its partners' freedom to individually negotiate freight rates.

While Mr Bisignani was calling global competition authorities in Hong Kong one of the 'three pillars of stagnation', in Washington Iata is applying for anti-trust immunity so that it can unilaterally apply higher rates to low-density cargo without consulting its 'partners', the shippers.

Iata last year had Resolution 502, its attempt (on behalf of its members) to impose a global 18 per cent rise in the price of transporting low-density air cargo, roundly and unanimously rejected by its industry partners.

But rather than listen to its partners, it applied to the United States Department of Transport (DoT) for exemption from anti-competition regulations to force the levy on an unwilling market.

Asked about the apparent hypocrisy, Mr Bisignani three times said he could not comment on an ongoing application with the DoT.

Below Deck would never want Iata to compromise an ongoing application with the DoT, but it is hard to see how explaining the rationale behind two so apparently divergent strategies would do so.

Actually, it is hard to see how such a heavily conflicted strategy can be rationalised at all.

Iata believes that airlines are fiscally handcuffed by industry regulations which restrict who they can merge with, and where they can fly to.

These restrictions, they say, limit their ability to create the economies of scale to survive in a bear market and stop them from shifting aircraft out of fading markets and into more promising ones.

What Iata would like to impose on the global air cargo industry would see everyone paying 18 per cent more for uplift, no matter how much low-density cargo they moved, and even if demand for space was weak.

If the truth be known, the regulatory and competition restrictions placed on the airline industry are probably to its detriment, especially in terms of efficiency.

Whether that is disproportionate to the way in which other industries are globally regulated is debatable.

But until Mr Bisignani and Iata practise what they preach there is a danger the airlines' industry partners will continue to see Iata's glowing oratories about the value of partnerships as little more than hot air.