By Emmie V. Abadilla
Sydney – Governments can secure the future of the aviation industry via smarter regulation, maintaining global standards and solving the looming capacity crisis.
This was the call made in the International Air Transport Association (IATA) Director General’s Report on the Air Transport Industry yesterday at the association’s 74th Annual General Meeting (AGM) and World Air Transport Summit.
“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. But there are challenges,” stressed Alexandre de Juniac, IATA’s Director General and CEO.
While the air transport industry has been deregulated since 1978 and the average person, who flew once every 6.6 years then now flies once in two years, a “creeping trend of re-regulation’ puts the gains made at risk, he pointed out.
He cited attempts to regulate passenger compensation, seat assignments, 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,” De Juniac explained.
IATA’s “smarter regulation” campaign asks governments to align with global standards, take into account industry input and analyze the costs of regulation against the benefits.
The IATA CEO also called for a vigorous defense of global standards that have guided the 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.”
He cited India’s taxing international tickets in contravention of ICAO resolutions and 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.
IATA likewise urged governments to find sustainable solutions to ensure the infrastructure needed 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. We need more airport capacity. But be cautious. Expecting privatization to be the magic solution is a wrong assumption,” De Juniac underscored.
The privatization of airport infrastructure has not lived up to airline expectations.
“As customers of many airports in private hands, airlines have far too many bitter experiences. Travelers also sense the problem. 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.”
The results of airport privatizations run counter to the results of airline privatization which saw the cost of travel drop dramatically. Airlines do not accept that privatizing airports must lead to higher costs. And neither should consumers or voters.
“How can making the transport infrastructure more expensive – which means less competitive – be a legitimate public policy objective?” he questioned.