x Abu Dhabi, UAEWednesday 17 January 2018

UAE backs international initiative for open skies

The Government has signed an agreement along with six other states and the European Commission to set out principles to liberalise the global airline industry.

The Government has signed an agreement along with six other states and the European Commission to set out principles to liberalise the global airline industry. The accord aims to help boost an industry that has lost US$53 billion (Dh194.66bn) in the past eight years, the International Air Transport Association (IATA) announced yesterday.

The non-binding agreement aims to change a 65-year-old bilateral system that places restrictions on how airlines can do business, said the industry's trade group. For example, national ownership requirements prevent airlines from merging across borders. "Sixty-five years ago, when airlines were divisions of the state apparatus, the bilateral system and its restrictions made sense," said Giovanni Bisignani, the director general and chief executive of IATA.

But today such restrictions hold back the airline industry, he said. Other previously regulated industries such as telecommunications have long been more open, the organisation said. In September, IATA revised its outlook for the Middle East for this year, forecasting a loss of $500 million for the region's commercial airlines compared with a previous prediction of a $1.5bn shortfall, as airlines gained long-haul market share due to adding more flights. At the same time, however, the organisation predicted a loss of $11bn for the industry worldwide, up from its previous forecast of a loss of $9bn.

"Their bottom lines are subject to the harsh discipline of the market -," IATA said. Also signing the agreement were the US, Chile, Malaysia, Panama, Singapore and Switzerland. The signatories represents about 60 per cent of global aviation. "We don't want government handouts," Mr Bisignani said. "What is important is that we have a level playing field and the freedom to do business that every other industry takes for granted. Today's signing is a major step towards that goal."

"Every step towards creating a more liberalised environment is welcomed," said Paul Griffiths, the chief executive of Dubai Airports. "It gives consumers more choice, stimulates traffic growth and is good for business. "The UAE continues to be on the leading edge with respect to open skies but it's clear we need more countries involved to build momentum globally." Mr Griffiths on Monday said passenger traffic at Dubai International Airport was on track to pass 40 million this year after posting double-digit growth for the past five months. This was due mainly to the continued capacity growth of Emirates Airline.

In the accord, the participants agreed on principles that would open up access to global capital markets, and airlines could also consider the possibility of an agreement to waive ownership restrictions, IATA said. The Multilateral Statement of Policy Principles regarding the Implementation of Bilateral Air Service Agreements also set out rules that would reduce restrictions on market access and make future bilateral negotiations easier.

The agreement has been designed to allow greater freedom for airlines to set prices. At the moment, countries can limit how much foreign airlines charge to fly into their jurisdictions. @Email:rbundhun@thenational.ae