Air Cargo: Open Skies needs expansion, says IATA

Patrick Burnson, Executive Editor -- Logistics Management, 4/1/2008

GENEVA—In an otherwise bleak overview of the air cargo industry, the International Air Transport Association (IATA) said the US-EU Agreement on Open Skies is increasing trans-Atlantic frequencies by 11 percent in April.

“London Heathrow and Spain are leading the change with an increase of 25 percent each, noted IATA analysts. “Increased competition will put pressure on yields in these markets.”

Elsewhere in the report, IATA downgraded its industry profit expectations for 2008 to $4.5 billion based on global economic growth slowing to 2.6 percent and an average annualized oil price of $86 per barrel.

“We still expect a positive bottom line of $4.5 billion, but it’s turning out to be a very tough year,” said Giovanni Bisignani, IATA’s director general and CEO. Bisignani also had some critical words to say about U.S. trade unions, and their resistance to expansion of the “Open Skies” agreement:

“Labor must see the good results of the consolidation that we have seen in Europe and paint itself into the picture of even broader global consolidation,” he said.

According to Bisignani, governments, too, must understand that the “flag on the tail” has lost its meaning.

“Airlines need to grow into global businesses, spreading risk and benefits in the same way that any other normal business would,” he said. “Ownership and control restrictions must go. And a good starting point is the Second Stage US-EU talks which begin soon.”

Richard Macomber, air transportation committee chairman for the National Industrial Transportation League, told LM that his constituents are also looking forward to Open Skies implementation.

“For us, it means more capacity and flexibility coming from more competition,” he said. “It’s a healthy and overdue development.”