Don't stop one airline buying another, IATA tells govts

The International Air Transport Association (IATA) has opposed the restrictions on cross- border acquisition of airlines by other airlines and asked world governments to remove these.

IATA represents 230 airlines across the world, comprising well above 90 per cent of international air traffic.

Restrictions on international capital prevent consolidation across borders. These "restrictions of the bilateral system are a dam that hold us back. It is time for that dam to burst," IATA Director-General and CEO Giovanni Bisignani told reporters here.

IATA, which concluded its annual general meeting (AGM) and World Air Transport Summit two days earlier, has been advocating that governments treat the aviation industry at par with others.

As a part of its 'Agenda for Freedom', the association has been asking that if a car or a telecom company could pick up a stake in another of its kind in a different country, why not an airline? It has been advocating that the restrictions—primarily based on security concerns which arose during the Second World War—were not valid now.

The current foreign direct investment policy in India does not allow a foreign carrier to pick up stake in Indian ones, too.

"Governments must act responsibly to ensure safety, security and a level-playing field. Airlines need the freedom to build efficiencies across borders, better serve their customers and achieve sustainable profits to fund growth and innovation," Bisignani said.

At the AGM, IATA announced that global carriers were expected to come out of their losses and post a $2.5 billion profit in 2010. Asking industry leaders to define a sustainable future by focusing on profitability, infrastructure and customers, he said, "It is time to think big and to look beyond cycles and shocks. Our duty is to work together to define a vision on which to build a sustainable future."

"We will be very close to zero accidents. We will emit half the carbon. We will eliminate queues, with integrated systems ensuring security as we process more passengers. We will operate with almost no delays in globally united skies. We will share costs and profits equitably across the value chain. We will be a consolidated industry of a dozen global brands, supported by regional and niche players. And, we will deliver value to investors," the IATA chief said.

Observing that at least 12 airlines had 10 per cent margins last year, he said this should spread to other carriers and, "in just over a decade, I can see $100 billion in industry profits on revenues of $1 trillion".

He said the aviation industry was fragmented, with 1,061 airlines, as a result of the bilateral system which regulated the global aviation industry.