4 Feb, 2008
IATA Needs A Policy Revamp — Whose Interests Is It Really Serving?
In reporting the latest financial results of its 240 member airlines last week, the International Air Transport Association (IATA) said that 2007 was the best in recent memory “despite the ambiguity of strong passenger growth,” weaker freight demand and oil prices being higher than ever.
The airline club said that international passenger traffic demand grew 7.4% for the full-year 2007, up considerably from the 5.9% increase in 2006. Even in December, passenger traffic demand rose 6.7%, a lower level of growth than the 9.3% jump recorded in November.
However, if its own previous forecasts are examined, such growth should have been impossible. Speeches and statements by IATA director general Giovanni Bisignani all through 2002 and 2003 are laced with fist-shaking complaints about rising oil prices, their impact on the airlines’ bottom line and the threat to the survival of aviation industry overall.
Also amongst IATA’s favourite whipping boys have been the airports and the increases in landing charges. One speech by Mr Bisignani ripped into the airports for taking advantage of their monopolistic situation, and demanded more transparency and consultation with the airlines.
Today, however, oil prices have more than doubled, far beyond the increases in airport charges, and the airlines are doing fine, including low-cost airlines. Last week, Royal Dutch Shell revealed it made $27.6 billion (£13.9 billion) in 2007 – a new record for a UK company. The Independent newspaper calculated this as being equivalent to more than £1.5 million an hour.
Today, even though fuel comprises by far the highest cost item for airlines, IATA is clearly not amongst those denouncing oil companies for what is being referred to as their “obscene profits”. Nor does it seek any transparency from them, as well as the intricate system of distribution and trading that contributes to pricing volatility even when there is no disruption of oil flows.
This raises serious questions about the credibility of IATA. With its past thundering having been proved so wrong, it is an open question as to whether any of its present positions and policy approaches hold any water.
The response to the oil price increases was to pass on the higher costs to the consumer through fuel surcharges, in a way that many consumer groups also found to be lacking transparency. Cutting internal costs and improving efficiencies also cushioned the impact to some extent.
However, with airports now well placed to turn the tables and ask airlines to explain their own silence towards the profiteering oil companies, IATA has backed off from criticising the airports.
For years, IATA also adopted a cavalier attitude towards travel agents, many of whom went out of business as a result of airline commission cuts. Agents were dismissively told that they just had to boost their working efficiencies and start taking advantage of new technologies. They are understandably sore.
And other issues have emerged. Airlines are now being questioned about their attitude towards climate change. A bigger issue is why they are unquestioningly allowing themselves to become part of the suffocating and intrusive security checks, which are also adding significant costs to aviation bills as well as raising serious questions about privacy and the hassle-factor at airports.
Founded 60 years ago, IATA today needs to come down from its high horse and take a closer look at its policy positions in order to make them less selective and more balanced. Broadening its parochial, myopic approach towards industry concerns would be a good start.
Oil prices, currency fluctuations, environmental issues and security problems are all manifestations of wider geopolitical controversies, and can no longer be addressed outside a wider context.
As many low-cost airlines, charter airlines, commuter airlines and even the business-jet companies are not members of IATA, can it any longer claim to be speaking for the aviation industry as a whole?
A good start would be redefine what is it exactly IATA stands for and whose interests is it defending. Is it the airlines’ interests in terms of profitability? Or is it the airlines’ shareholders? Or their employees?
Does it also have a broader responsibility towards defending the interests of passengers in the face of frustrating security checks, which lower the quality of the overall travel experience?
IATA has bitterly criticised environmental groups and politicians for “unfairly” targetting airlines in the climate change debate. But a closer look will show that the security apparatus is targetting the aviation industry just as unfairly.
So why isn’t IATA demanding that the same security checks being inflicted on airline passengers be equally and fairly applied to all transport sectors like buses, trains and even commuter ferries, all of which are just as easily susceptible to attack? Why should only airline passengers face the hassles and bear the costs?
With its own forecasts of five years ago already having been proved wrong, and its policy apparatus showing serious inconsistencies, IATA can ill afford to become a victim of its own contradictions.
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