Key nations agree on open sky deal

The International Air Transport Association (IATA) announced the signing of a Multilateral Statement of Policy Principles regarding the Implementation of Bilateral Air Service Agreements by seven states and the European Commission.

The signing took place at the conclusion of the IATA-hosted second Agenda for Freedom Summit in Montebello, Canada.

The states that signed the document are Chile, Malaysia, Panama, Singapore, Switzerland, the United Arab Emirates, the United States of America, as well as the European Commission. In total they represent some 60% of global aviation.

“This is an historic achievement that will help set the foundation for a financially sustainable global aviation industry. I congratulate the seven governments and the European Commission for their visionary leadership. One agreement will not change the world. But this is a strong signal that this industry’s future must be realized in a much more liberal environment. Today’s signing is the beginning of a process of change. Our shared task now is to bring even more countries on board,” said Giovanni Bisignani, IATA’s Director General and CEO.

“Greater economic freedom is a critical element for aviation and I commend IATA’s Agenda for Freedom initiative. Today’s Statement of Policy Principles is perfectly in line with ICAO’s vision for liberalization as articulated at the fifth Worldwide Air Transport Conference in 2003. While safeguarding safety, security and environmental responsibility, governments and industry must also find a platform for financial sustainability in civil aviation,” said Roberto Kobeh Gonzalez, President of the Council of ICAO, who witnessed the signing.

The 65 year-old bilateral system of air service agreements places restrictions on how airlines can do business in ways that no other industry faces. National ownership requirements do not allow airlines to merge across borders, precluding the development of global players that has been seen in other previously regulated industries such as telecommunications. Airlines are also restricted in market access, until government negotiators conclude agreements to allow cross-border services.

“Sixty-five years ago, when airlines were divisions of the state apparatus, the bilateral system and its restrictions made sense. The world has changed. Airlines are real businesses. Their bottom lines are subject to the harsh discipline of the market that has seen the industry lose a net of US$53 billion since 2001. Airlines made global business possible, but they remain a highly fragmented industry unable to cover their cost of capital. We don’t want government handouts. What is important is that we have a level playing field and the freedom to do business that every other industry takes for granted. Today’s signing is a major step towards that goal,” said Bisignani.<Korea Shipping Gazette>