IATA Calls for Smarter Regulations and Global Standards

The International Air Transport Association is calling on governments around the world to combat what it described as the “creeping re-regulation” threatening benefits the industry has realized since 1970s deregulation.

“The deregulation of the air transport industry that began in 1978 in the US ignited global changes that enabled the spread of air transport’s benefits. Competition, saw the price of air connectivity fall making air transport much more accessible,” IATA said in a statement. “A creeping trend of re-regulation, however, puts the gains of deregulation at risk.”

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The message about re-regulation was part of a broader statement issued by IATA that also included urging governments to maintain the integrity of global standards, and address a looming capacity crisis.

The statement was part of the IATA Director General’s Report on the Air Transport Industry, which was delivered at the 74th IATA Annual General Meeting and World Air Transport Summit.

“On aviation’s core mission to deliver safe, secure, accessible and sustainable connectivity, the state of our industry is strong and getting stronger. And with ‘normal’ levels of profitability we are spreading aviation’s benefits even more widely,” Alexandre de Juniac, IATA’s director general and CEO, said in a statement. “But there are challenges. Smarter regulation needs to counter the trend of creeping re-regulation. Global standards must be maintained by the states that agreed to them. And we need to find efficient solutions to the looming capacity crisis,” said

Re-Regulation

In 1978 the average person flew once every 6.6 years. Today the average is closer to once in two years. Citing examples from around the world, de Juniac noted that regulatory over-reach now includes attempts to prescriptively regulate passenger compensation, seat assignments, the ticket options that can be offered to consumers and prices charged for various ancillary services.

“Regulations must add value. In assessing that, regulators must recognize the power of competition and social media to safeguard consumer interests. Governments should not distort market effectiveness with regulations that second-guess what consumers really want,” said de Juniac.

De Juniac noted that one of the most exciting current regulatory developments is the sweeping review of US commercial regulations with the aim of keeping only those where the benefits outweigh the costs to both travelers and the industry.

Global Standards

De Juniac also suggested there should be a vigorous defense of global standards that have guided the safe and efficient development of aviation.

“We must take governments to task. It is unacceptable that global standards are being ignored by the very governments that created them,” said de Juniac.

Among the examples De Juniac cited were:

—India taxing international tickets in contravention of ICAO resolutions

—States planning new environment taxes even as the ICAO-brokered Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is about to commence as the global market-based measure for managing emissions

—Nearly two decades after the Montreal Convention 1999 was agreed it is not universally ratified, its important modernizations apply in only 130 states

—There is not 100 percent compliance with Chicago Convention Annex 13 requirements for complete accident investigations. Of the approximately 1,000 accidents over the last decade, only about 300 accident investigations have been concluded with published reports

—Annex 17 of the Chicago Convention sets baseline security requirements. Yet ICAO audits reveal that only 28 percent of states meet them. Moreover, 37 percent of states fail on resolutions of security concerns

Infrastructure

Finally, IATA urged at its recent gathering that governments find sustainable solutions to ensure infrastructure is in place to meet growing demand for connectivity.

“We are in a capacity crisis. And we don’t see the required airport infrastructure investment to solve it. Governments struggle to build quickly. But with cash-strapped finances, many are looking to the private sector for solutions,” said de Juniac. “We need more airport capacity. But be cautious. Expecting privatization to be the magic solution is a wrong assumption.”

It is not the first time IATA has made this concern public. Earlier this year at the Singapore Airshow Aviation Leadership Summit, de Juniac issued a similar message of concern.

The privatization of airport infrastructure has not lived up to airline expectations, according to IATA's latest statement.

“As customers of many airports in private hands, airlines have far too many bitter experiences. Travelers also sense the problem,” de Juniac, continued.

According to Skytrax, five of the top six traveler-preferred airports are public.

“Motivated by our members’ frustration, we did our own performance benchmarking. Privatized airports are definitely more expensive. But there is little difference in efficiency or investment levels compared to airports in public hands,” de Juniac said.

Airlines do not accept that privatizing airports must lead to higher costs. And neither should consumers or voters, said IATA.

“How can making the transport infrastructure more expensive—which means less competitive—be a legitimate public policy objective?” said de Juniac.

While IATA's research did not reveal a one-size-fits-all solution to ensure sufficient, fit-for-purpose and affordable airport infrastructure, it did point towards positive experiences for consumers and airlines with variations of corporatization.

The 74th IATA general meeting is considering a resolution regarding privatization of airport infrastructure that would petition governments to take a variety of measures, including focusing on the long-term economic and social benefits of an effective airport as part of the country’s critical infrastructure.

The resolution also recommends that governments learn from positive experiences with corporatization, new financing models and alternative ways of tapping private sector participation.

IATA represents more than 275 airlines comprising 83 percent of global air traffic.