IATA: Open Skies Needs Cargo

The US-EU Open Skies agreement went into effect last Sunday, March 30th, 2007. It is generating a major land grab for landing rights at London Heathrow, as well as holiday destinations in Europe.  European air carriers, anxious to leverage opportunities presented by the favorable Euro-US Dollar trading environment are also cashing in on Europeans who want to take a cheap American holiday.

Whats missing is where cargo fits into the Open Skies agreement. Clearly for air freight forwarders the available belly space into London-Heathrow will be advantageous immediately. Round Two negotiations on the Open Skies agreement make it even more interesting for cargo carriers as well as forwarders. IATA Director General Giovanni Bisignani is stumping for broader air carrier opportunities in Round Two, which should start discussion in the next 60 days.

Up for discussion in Round Two, will be EU carrier access to the domestic US market, as well as foreign ownership of air carriers operating in the US market.  Potentially that means that some forwarders and European carriers could operate their own airlines in the domestic US market.  I'm frankly surprised this hasn't come up as an election year issue yet, especially for the Democratic Party. 

That means challenging cabotage laws in the US, which for a hundred years have been sacrosanct. With a global economy and a global marketplace, these laws will need amendment at some stage. Trusted partners, and mutual regulation may eventually create regional markets beyond continents and single governments.That will allow air carrier and (one day...) ocean carriers to gain opportunities to serve local markets with increased efficiency.

So long as US jobs are considered in these developments and US unions can get past globalized ownership, this could be a good development. Trade is already global and trans border. Carrier operations should be able to grow to match the opportunities.  The unions could be part of the cure if engaged early.

clipped from www.logisticsmgmt.com Air Cargo: Open Skies needs expansion, says IATA Patrick Burnson, Executive Editor -- Logistics Management, 4/1/2008 GENEVA—In an otherwise bleak overview of the air cargo industry, the International Air Transport Association (IATA) said the US-EU Agreement on Open Skies is increasing trans-Atlantic frequencies by 11 percent in April. “London Heathrow and Spain are leading the change with an increase of 25 percent each, noted IATA analysts. “Increased competition will put pressure on yields in these markets.” Elsewhere in the report, IATA downgraded its industry profit expectations for 2008 to $4.5 billion based on global economic growth slowing to 2.6 percent and an average annualized oil price of $86 per barrel. “We still expect a positive bottom line of $4.5 billion, but it’s turning out to be a very tough year,” said Giovanni Bisignani, IATA’s director general and CEO. Bisignani also had some critical words to say about U.S. trade unions, and their resistance to expansion of the “Open Skies” agreement: “Labor must see the good results of the consolidation that we have seen in Europe and paint itself into the picture of even broader global consolidation,” he said.

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