UAE joins IATA's bilateral air services agreement

Dubai: The UAE has joined a group of seven countries in further liberalising its air space by signing Bilateral Air Service Agreements under the International Air Transport Association's (IATA) Multilateral Statement of Policy Principles.

The signing countries include Chile, Malaysia, Panama, Singapore, Switzerland, the UAE, the US and the European Commission, representing about 60 per cent of global aviation.

IATA commissioned InterVISTAS to study the potential impact of liberalisation in 12 markets including Australia, Brazil, Chile, India, Mauritius, Morocco, Peru, Singapore, Turkey, the UAE, Uruguay and Vietnam which says liberalisation of both market access and ownership and control would increase annual GDP in the 12 economies by 0.86 per cent to $67.6 billion (248.3 billion).

Greater market access and ownership and control in the 12 economies would generate 2.4 million jobs while reducing average fares by 38 per cent, it says.

"This is an historic achievement that will help set the foundation for a fin-ancially sustainable global aviation industry.

"I congratulate the seven governments and the European Commission for their visionary leadership. 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. Today's signing is the beginning of a process of change. Our shared task now is to bring even more countries on board," Giovanni Bisignani, IATA's Director General and CEO, said in a statement.

The signing took place at the conclusion of the IATA-hosted second Agenda for Freedom Summit in Montebello, Canada.

Paul Griffiths, Dubai Airports CEO, said the UAE's General Civil Aviation Authority (GCAA) has set up a working committee to further rationalise and develop air traffic and air navigation systems that will help the airports to offer better services.

"We have one of the most liberalised and open air policies and we do not restrict any airlines to serve Dubai as long as they fulfil the safety and certification requirements, which has helped us to develop the market," he told Gulf News.

The 65 year-old bilateral system of air service agreements places restrictions on how airlines can do business in ways that no other industry faces.

"Sixty-five years ago, when airlines were divisions of the state apparatus, the bilateral system and its restrictions made sense. The world has changed. Airlines are real businesses. Their bottom lines are subject to the harsh discipline of the market that has seen the industry lose a net $53 billion since 2001," said Bisignani.

"Airlines made global business possible, but they remain a highly fragmented industry unable to cover their cost of capital. We don't want government handouts. 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."

The policy principles address three main areas: freedom to access capital markets, freedom to do business and freedom to price services.

IATA represents some 230 airlines comprising 93 per cent of scheduled international air traffic.