Aviation freedom accord signed 

Source: ReutersAirbus A-380

The European Union, the United States and six other countries agreed on an agenda for freedom for airlines that could open the way for mergers and consolidation across the financially troubled industry.
   
The International Air Transport Association (IATA), the carriers' global body that has long sought liberalisation for commercial aviation, said the non-binding agreement was signed at a meeting it hosted at Montebello, Canada.
   
"This is an historic achievement that will help set the foundation for a financially sustainable global aviation industry," declared IATA Director General Giovanni Bisignani in a teleconference from Canada just before the signing.
   
"One agreement will not change the world. But this is a strong signal that this industry's future must be realised in a much more liberal environment," Bisignani said.
   
The agreement could clear the way for more deals on the lines of the planned merger between British Airways plc and Spain's Iberia Lineas Aereas de Espana SA announced last week.
   
Other signatories of the Multilateral Statement of Policy Principles - which IATA has dubbed its Agenda for Freedom - were Chile, Malaysia, Panama, Singapore, Switzerland and the United Arab Emirates.
   
Bisignani said that with the 27 EU member countries and the United States, 60 percent of global aviation was aligned with the key principles: freedom to access global capital markets, freedom to do business, and freedom to price services. 
   
Bilateral agreements
   
Most governments currently enforce 65-year-old rules that are based largely on many bilateral agreements and bar cross-border mergers.
   
The only exceptions result from the EU single market, the latest of which is the planned tie-up between BA and Iberia which the two carriers say will give them the scale to ride out recession.
   
Bisignani noted that IATA had 230 airline members and that there were well over 1,000 other airlines around the world - a proliferation that existed in no other industry.
   
"The rules simply do not allow us to merge and consolidate," he said, insisting that mergers were essential for an industry in deep crisis with too many players amid world economic woes and overall losses expected to be $US11 billion this year.
   
IATA said a study it commissioned in 12 mainly emerging economy markets, including some of Monday's signatories, showed freeing up market access and ownership rules would create over two million jobs, increase GDP and cut average fares by 38%.
   
Bisignani, who has promoted the Agenda for Freedom since a conference in Kuala Lumpur a year ago, said he expected other countries, including Australia, India, Morocco and New Zealand, to sign up in the not too distant future.
   
Recognising that the agreement was not binding, he said the countries which had signed up on Monday are focused and committed to seeing its provisions brought into effect.

"They will be the drivers," he added.