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Don't stop airline acquire another airline: IATA tells govts

india Updated: Jun 12, 2010 15:33 IST

The International Air Transport Association (IATA) has opposed the restrictions on cross-border acquisition of airlines by airlines and asked world governments to remove them.

Restrictions on international capital prevent consolidation across borders. These "restrictions of the bilateral system are a dam that holds us back. It is time for that dam to burst," IATA Director General and CEO Giovanni Bisignani told reporters in Berlin.

The IATA, which concluded its Annual General Meeting and World Air Transport Summit two days ago, has been advocating that governments treat the aviation industry on par with others.

As part of its 'Agenda for Freedom', the IATA has been asking that if a car or a telecom company can pick up stake in another car or telecom firm in a different country, why can't an airline. It has been advocating that the restrictions, primarily based on security concerns which arose during the Second World War, were not valid now.

The current FDI policy in India too does not allow a foreign carrier to pick up stake in Indian ones.

"Governments must act responsibly to ensure safety, security and a level-playing field. And airlines need the freedom to build efficiencies across borders, better serve their customers and achieve sustainable profits to fund growth and innovation," Bisignani said.

At the AGM, IATA announced that global carriers were expected to come out of their losses and post a $2.5 billion profit in 2010.

Asking industry leaders to define a sustainable future by focussing on profitability, infrastructure and the customer, he said "it is time to think big and to look beyond the cycles and shocks. Our duty is to work together to define a vision on which to build a sustainable future."

"We will be very near to zero accidents. We will emit half the carbon. We will have eliminated queues with integrated systems ensuring security as we process more passengers. We will operate with almost no delays in globally united skies.

"We will share costs and profits equitably across the value chain. We will be a consolidated industry of a dozen global brands supported by regional and niche players. And we will deliver value to investors," the IATA chief said.

Observing that at least 12 airlines have had ten per cent margins last year, he said this should spread to other carriers and "In just over a decade, I can see $100 billion in industry profits on revenues of $1 trillion".

He said the aviation industry was fragmented with 1061 airlines as a result of the bilateral system which regulates the global aviation industry.