Governments must avoid “creeping re-regulation”, maintain the integrity of global standards and address a capacity crisis, according to IATA’s Director General and CEO, Alexandre de Juniac.
“On aviation’s core mission to deliver safe, secure, accessible, and sustainable connectivity, the state of our industry is strong and getting stronger,” said de Juniac, in his Report on the Air Transport Industry at the 74th IATA Annual General Meeting (AGM) and World Air Transport Summit.
“And with normal levels of profitability, we are spreading aviation’s benefits even more widely. But there are challenges. Smarter regulation needs to counter the trend of creeping re-regulation.
“Global standards must be maintained by the states that agreed them. And we need to find efficient solutions to the looming capacity crisis.”
The trend of re-regulation has been growing, and it puts the gains of deregulation at risk.
Governments should not distort market effectiveness with regulations that second-guess what consumers really want
Regulatory overreach now includes attempts to prescriptively regulate passenger compensation, seat assignments, the ticket options that can be offered to consumers, and prices charged for various ancillary services.
At the same time, governments are failing to align themselves with global standards designed to deal with such issues.
“Regulations must add value,” said de Juniac. “In assessing that, regulators must recognize the power of competition and social media to safeguard consumer interests. Governments should not distort market effectiveness with regulations that second-guess what consumers really want.”
This is the spirit of IATA’s ‘smarter regulation’ campaign, which asks governments to align with global standards, take into account industry input, and weigh the costs of regulation against the benefits.
Meanwhile, examples of global standards being ignored include the likes of India, which taxes international tickets in contravention of ICAO resolutions. The Montreal Convention is still not universally ratified while certain Chicago Convention annexes have only partial compliance.
We need more airport capacity. But be cautious. Expecting privatization to be the magic solution is a wrong assumption
Finally, de Juniac acknowledged a capacity crisis. And the required airport infrastructure investment to solve the problem is not apparent. “Governments struggle to build quickly,” he said.
“But with cash-strapped finances, many are looking to the private sector for solutions. We need more airport capacity. But be cautious. Expecting privatization to be the magic solution is a wrong assumption.”
The results of airport privatizations run counter to the results of airline privatization that saw the cost of travel drop dramatically.
“Airlines do not accept that privatizing airports must lead to higher costs,” de Juniac stressed. “And neither should consumers or voters.
“How can making the transport infrastructure more expensive—which means less competitive—be a legitimate public policy objective?"