FLUG REVUE November 2004: IATA sees need for change in regulations

IATA-DIRECTOR GENERAL DEMANDS GLOBAL REFORMS

By Volker K. Thomalla

Despite being General Director of the International Air Transport Association (IATA), Giovanni Bisignani is a man who does not mince his words. Thus, at a conference on the eve of the General Assembly of the International Civil Aviation Organisation (ICAO), he was forthright in expressing his views on the situation of the air transport industry and in calling on those responsible for policy in the ICAO states to create the conditions that will enable the airline industry to recover again. “The industry needs new structures to allow it to deal with cycles and shocks effectively. And all the partners – airlines, airports, air navigation service providers and governments – have a role to play.”

Bisignani identified five areas in which he would like to see changes. The first of these was fuel efficiency: due to the pressure of the high oil price, consumption of fuel by the airlines must be reduced. In his opinion, the easiest way to achieve this would be to improve route efficiency so that detours are minimised. However, without the cooperation of governments, this objective would not be achieved.

Security was a second area in need of reform, according to Bisignani. Airport security had improved greatly since 11 September 2001. However, because governments had totally failed to co-ordinate and harmonise measures, the airlines were being forced to grapple with an unnecessary bureaucracy that generated global costs of around $5 billion. Governments must finally stop passing the buck to the airlines and instead accept their responsibility for national security by paying for the costs of security.

Insurance risks were the third item on Bisignani's action agenda. The airlines could not afford to cover all the risks themselves, nor could governments afford to have them stop flying because of the insurance problem. Solutions that were sustainable in the long-term were required urgently.

The fourth item mentioned by the IATA General Director was liberalisation. Airlines wanted to finally be allowed to run their businesses as businesses and to gear themselves to the market situation. Significant steps were required, e.g. a general Open Sky agreement between Europe and the USA.

Finally, Bisignani laid in to the monopoly suppliers in the airline industry. For example, airports and air navigation service providers were exploiting their monopoly position by charging for their services on a cost-plus basis, leaving the airlines and passengers to pick up the tab. The inefficiency thus built into the system was no longer acceptable.

Bisignani was not just scathing about governments, but he also exhorted the airlines to adapt their structures to the new situation. Thus, for example, IATA has set a target of getting all its members to eliminate paper tickets by 2007 in order to reduce costs.

Even if, as the spokesman of an airline organisation, Bisignani naturally asks more of the others than of his own members, he is right to demand new structures. The airline industry is still under a lot of pressure, for, although the passenger numbers are climbing again, revenue is declining. And the high price of oil is not the only factor contributing to this. Without new structures that take into account the extremely price-conscious behaviour of today's passengers, the airline industry will change in a way that cannot please any of the parties involved.

From page 4 of FLUG REVUE 11/2004

Last updated 13 October 2004

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