TIACA: Evolved bilateral open skies system needed in developed markets
An executive for The International Air Cargo Association said this week in Geneva that bilateral open skies agreements are sufficient for developing aviation markets, but not for developed markets.
In an address to World Trade Organization delegates on the subject of air cargo liberalization, Ulrich Ogiermann, vice chairman of TIACA and president and chief executive officer of Cargolux Airlines, said the current bilateral system is far from perfect, stating that the need to obtain explicit approval by governments for every operation was a lengthy process and not necessarily compatible with the economic requirements of trading countries or carriers' business flows. The current practice, he added, is mainly driven by passenger traffic considerations and is often influenced by 'national' carriers.
Ogiermann called for an urgent overhaul of a system that dates back to The Chicago Convention in 1944, a time when regulations were mainly driven by the desire to control competition in a post war environment. Today, he added, the principles of the convention with regards to entry, price and capacity were 'out of place and time.'
He said the bilateral system works for developing markets, pointing to China's success in striking a 'difficult balance' since 2000 between opening up market entry points and protecting fragile local airlines. Subsequently, the Chinese market has gained significant momentum.
However, developed markets require evolved versions of this bilateral regulatory system. Examples of this already exist between trading blocs around the world as well as in the U.S. domestic market — liberalized in the late 1970s — the intra-EU market since the 1990s and the first phase of open skies between the United States and European Union set for 2008.
Rapid change, he said, must come by separating cargo from the bilateral agreements. Regional trading blocs must encourage multilateral agreements between their members. Ogiermann called for a clear vision for leveraging the bilateral system, stating that governments and trade organizations must seize the momentum.
'Air freight is gaining in importance but is currently too restricted by a bilateral system designed for passenger traffic demands,' he said. 'Including air transport services into GATS will not improve market access for cargo carriers. We need more decisive action.'