Outside view of U.S. market

Outside view of U.S. market

A call for more global cooperation in the air cargo industry

By W.R. Christopher Foyle, Chairman, British Cargo Airline Alliance

November 2000

In the past two years, this group of four British cargo airlines has attempted to get cargo issues considered as an important part of the Open Skies talks going on between the U.K. and U.S. governments. We?ve been raising important trade issues which must be addressed if any new aviation treaty between our two countries is to be fair and balanced. And we?ve made progress — support from airlines, airports, shippers, politicians, and the media.

I want to ask, ?What should the role of government be in ensuring that the vital services these airlines provide can be provided as efficiently as possible so that world trade can be assisted and promoted??

In the view of the BCCA and many other airlines, the straightforward answer is that government should stop regulating. It should stop treating aviation differently to any other form of world trade. It should stop manipulating the hopelessly outdated bilateral negotiating system to the economic advantage of its own airlines. It should allow the market to govern the supply and demand for aviation and air services in the same way that it allows the free market to operate in almost every other area of economic life.

Clearly, government has a role to play in ensuring that safety levels are protected. It also has a legitimate role in protecting its national interests against criminal and terrorist activities. However, government should treat the airline industry just like any other form of international business.

HOW AVIATION IS TREATED DIFFERENTLY
First, it is regulated internationally by a system that dates back to 1944 (the Chicago Convention) and was created in a way that reflected politics at that time. Currently, the aviation regime between any two countries is governed by bilateral treaty.

Aviation — that most global business of all businesses, whose very raison d?etre is to cross boundaries, break down barriers, facilitate communication and enable the free transportation of people and goods — is hampered by an antiquated system of international regulation that ties up millions of dollars of airline resources in government affairs departments.

LET MARKETS DECIDE
My suggestion to government is to relieve yourself of the responsibility of telling airlines when and where they may fly their aircraft. Let the market decide.

There is an obvious way in which this could be achieved. You?ve already done it within the U.S. market just as we?ve done it within the European Union since 1993. We?ve both created ?common aviation areas? within our respective geographic areas. Now we can join them together, creating all the benefits of liberalization and deregulation all over again, to the benefit of airlines, passengers, shippers, and the economy as a whole.

Join the U.S. area to the European aviation area, creating a Transatlantic Common Aviation Area (TCAA), covering half of the world?s aviation business and creating a free market in which airlines can offer the services people and shippers want without government interference in purely commercial issues.

This idea has already been put forward by the European Union but, unfortunately, it has not been welcomed very warmly by the U.S. government. We can understand a fear of change — it was present in the U.S. before domestic deregulation and it was there in Europe before we liberalized — but experience shows that the overall effect of such changes is beneficial even if the short-term effects can sometimes be unexpected.

KEY CONSIDERATIONS
I?ll touch on four key areas where the U.S. exhibits a closed mind to truly Open Skies. Areas in which government should now look to facilitate rather than inhibit progress.