Smarter regulation critical to global aviation growth

The International Air Transport Association (IATA) warns the lax regulatory oversight of some governments is having a negative impact on aviation’s viability. Chief correspondent, Tom Ballantyne, reports.

March 1st 2019

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Smarter Regulation, said IATA director general Alexandre de Juniac, is more common sense than rocket science. Read More » The problem, however, is some governments are not listening to the industry.

From slot allocation at crowded airports to legislation on passenger rights and aeropolitical issues, airlines are facing a host of challenges.

'Airline needs from airports are rather simple. We need adequate capacity, the facility must meet airline technical and commercial requirements and it must be affordable. We don’t really care who owns the airport so long as it delivers against these goals. Achieving these will also serve the local community well by supporting growth in traffic and stimulating the economy'

Alexandre de Juniac IATA director general and CEO

De Juniac told a CAPA Qatar Aviation Aeropolitical & Regulatory Summit in Doha last month that governments are not consulting with the industry and they are not keeping pace with industry developments.

He said slots, passenger rights and airport privatization illustrate why a Smarter Regulation approach, based on global standards, is critical to fostering aviation’s future growth.

“The first example that comes to mind is the Worldwide Slot Guidelines (WSG),” said de Juniac. “This is a well-established global system for allocating airport slots. The problem is that more people want to fly than airports have the capacity to accommodate.

“The solution is to build more capacity, but it is not happening fast enough. So, we have a globally agreed system to allocate slots at capacity constrained airports. Today, the WSG is being used at about 200 airports accounting for 43% of global traffic.

“Some governments have tried to tinker with the system. And we have fiercely resisted. Why? Because allocating a slot at Tokyo, for example, means nothing if there is not a corresponding slot available at the destination at the required time. The system will only work if the parties at both ends of a route are using the same rules. Tinkering by any participant messes it up for everybody.”

Like any system, WSG can always be improved, he continued. IATA was working with Airports Council International (ACI) on optimization proposals. As a result of the collaboration, it has come to light that there is no standard methodology for airports to declare their capacity, he said.

“And it is becoming clear that under-declaration by airports is an artificial limit on capacity and a handicap in the system that must be remedied. We reject categorically, however, proposals for slot auctioning. An important principle of Smarter Regulation is that it creates value as measured by cost-benefit analysis. Auctioning does not create more capacity. It would, however, add costs to the industry. And it will be detrimental to competition as new capacity would only be available to those airlines with the deepest pockets,” he said.

He also took aim at Passenger Rights legislation and the importance of consultation between authorities and the industry. “For nearly 15 years the industry has raised concerns about the European Passenger Rights Regulation - the infamous EU 261. It is a confusing, poorly worded regulation that is adding cost to the European industry,” he said.

“Plus, it is not doing its best at protecting consumers. Even the European Commission sees the shortcomings of this regulation and has proposed important reforms. But these have been held hostage for years as a result of the implications of the Gibraltar dispute between the UK and Spain.

“It is absurd that a dispute dating from the early 1700s - over two centuries before the first airline took flight - is holding up reform of an airline regulation. But that is the reality. The point to be made is simple. Ample consultation must take place before a regulation becomes law because fixing mistakes can take a very long time.”

De Juniac said airlines support protecting the rights of their passengers and pointed out a resolution of the association’s 2013 AGM outlined principles to do just that. “We want a commonsense approach that includes good communication, respectful treatment and proportional compensation when needed,” he said.

“The IATA resolution was taken into consideration when governments agreed the ICAO principles on passenger rights. Even though governments signed up to these principles, many persist in going it on their own. And too often they do so in a knee-jerk response to an incident.”

The airline association boss said carriers this year will safely meet the transport needs of 4.6 billion travelers and power the global economy by transporting 66 million tonnes of cargo, which accounts for a third of the value of global trade.

“We could not, however, operate at the current level of safety, with the same level of efficiency or at the scale that we do without commonly understood and implemented rules of the game. Regulation is vitally important to aviation,” he said.

“Many have the impression that trade associations ‘fight’ regulation. As the director general of IATA, it is true much of my time is focused on advocacy, but with the aim of achieving the regulatory structure needed for aviation’s success.

“On the one hand, that means working with governments directly and through the International Civil Aviation Organization (ICAO) to produce regulation that enables aviation to fulfill its mission as the Business of Freedom. On the other hand, it means rallying the airlines to agree to global standards that support the global system.

“To complete the metaphor, global standards and regulation work hand-in-hand to make flying safe, efficient and sustainable. And by sustainable, I mean both in terms of the environment and the industry’s finances.”

Regulation must keep pace with industry developments, said de Juniac. “While we disagree with punitive regulation, there are cases where stronger regulation is needed to keep pace with developing industry trends. Airport privatization is a case in point. Cash-strapped governments are increasingly looking to the private sector to help in the development of airport capacity. We believe that critical infrastructure capacity like airports must be developed in line with user needs”.