Freight News, Air, Logistics, Business

Air agreements are relic of the past, says TIACA

[ October 5, 2011   //   Chris ]

The International Air Cargo Association (TIACA) has slammed the bilateral agreements that govern most air traffic as “stuck in the past” and instead called for the creation of a liberalised air cargo industry that would create “new economy highways in the sky”.

Addressing the Asia-Pacific Economic Co-operation (APEC) USA 2011 conference in San Francisco in early October, TIACA secretary general, Daniel Fernandez highlighted the airfreight and express industry’s role in allowing “large pools of labor to connect with the needs of wealthy Western European, North American and Northeast Asian markets.” Otherwise remote agricultural regions were able to access world markets and receive export earnings.

Unfortunately, however, “air cargo is still regulated by rules established over 60 years ago in the 1944 Chicago Convention when almost all airlines were national flag carriers and the air cargo industry was still in its infancy. Change is overdue.”

The bilateral system “does not offer airlines the freedom to sell their products where there is demand and to merge operations where it makes financial sense. (They) ignore the needs of the emerging fast and flexible supply chain practices.”
With the flow of airfreight geographically unbalanced, more liberalisation would allow more efficient use of resources. But whereas “most parts of the freight transportation industry can respond to such shifts without restriction. Container ships sail to any ports they choose. Freight forwarders have also grown into global entities, operating with little restriction in all parts of the world. Air transport cannot,” he added.
Where air traffic rights have been liberalised, TIACA said it resulted in more capacity, lower rates, and increased commercial opportunities and economic development – for example the US domestic market, the EU’s Common Aviation Market and Dubai.
While full liberalisation of the industry might be too much to try to achieve in one fell swoop, TIACA favours a stepped approach, starting with separation of cargo bilaterals from passenger agreements. Once cargo has a separate bilateral system, regional trading blocks can provide momentum towards implementation of multilateral agreements.
A new generic agreement for cargo flights would grant the same rights and privileges, on a reciprocal basis, to all signatories, the aim being to establish a multi-lateral group of countries permitting full cargo freedom rights. The economic benefits would then provide the incentive for full liberalisation of passenger services – a position that has been endorsed by the European Shippers’ Council, ACI, and FIATA, Fernandez told the conference.