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Aviation History
1960
1960 - 0121.PDF
FLIGHT, 22 January 1960 Enforcing Airline Agreements HOW IATA's CONTROL SYSTEM OPERATES By Henry M. Kingsley THE International Air Transport Association has lately been the targetfor growing criticism of its fare-fixing policies. The writer of this article, in describing how the enforcement office operates, defends this side ofthe Association's activities: "like the police force," he says, "IATA enforcement is a powerful deterrent to many would-be offenders and inthis way avoids the chaos and indiscriminate dealing which would other- wise overtake the airline industry." Sometimes—despite the activitiesof the enforcement office—deviations from IATA policies may get out of hand, as in the recent South American rate war. Then order must berestored to the situation by mutual agreement between airline presidents under direct pressure from IATA's director-general. ON the 56th floor of one of the tallest buildings in New York,where 42nd Street crosses Fifth Avenue, you will find aglass door bearing the inscription, "International Air Transport Association" and the familiar emblem of the world'sairlines' own industry association. Cross the threshold and you will be confronted with the bustle and noise of a busy Manhattanoffice. This is the hub of IATA activity in the Americas, secre- tariat headquarters for Traffic Conference 1. Over to the right,in a small, self-contained wing of its own lies the enforcement office, where the day-to-day work of the airlines' watchdogs iscontrolled. Here Rudolph Feick, chief enforcement officer, rules over a small administrative staff which handles the tremendousvolume of paper-work involved in the little-known policing function of IATA. It was in 1950, only four years after the new, post-war IATAhad adopted its first agreements governing the sale of air trans- portation, that the Association's executive committee decided toput teeth into their traffic conference resolutions. By this time it was acknowledged that for a vanety of reasons—based on goodfaith and bad—violations of agreements were occurring and, human nature being what it was, would continue to occur intothe foreseeable future. Apart from any other consideration, the executive committee must have realized that continued govern-ment recognition depended upon the Association's ability to keep its own house in order or, at least, upon a convincing demonstra-tion of its willingness to try to do so. The enforcement office was then set up in New York as a department of the Association'shead office responsible to the director general, and Rudolph Feick, formerly Conference 1 secretary, plunged into his taskwith only two assistants to help him. His instructions were to report any deviations whatsoever from the tariffs and proceduresadopted as resolutions by the traffic conferences of the Association, individually and jointly. The Growing Task ^ - "'- • No one could have foreseen how heavy and involved this taskwas to become; embracing the inspection not only of every mem- ber airline's sales office but, as it soon did, of all their authorizedagents the world over. Nine years ago, of course, the whole air transportation picture, in all three dimensions, was only a fractionof the size it is today. Traffic volume then was minute by com- parison. The Association's membership was considerably lessand was made up to a large degree of companies still in their adolescence. Sales and accounting records had not been takenover by the complex mechanized systems in use today and the tariff structure was a simple one based on a straightforwardsingle class of travel. Within a few years, with traffic and air fleets growing fast, it became evident that far more irregularities weretaking place than could be effectively policed by a mere handful of men and in 1954 the director-general was authorized to increasesubstantially the staff of enforcement officers in the field. By this time, of course, the value of enforcement as a steadying influenceand a deterrent had been proved beyond doubt, and the Association began to receive greater financial support for its efforts. Nearly all enforcement officers are drawn from the airlines andin addition to the obvious basic qualifications of expertise in air transport tariffs and procedures and in accountancy they must,above all, possess an extraordinarily high degree of patience, tact and mature judgment. Generally speaking they are stationedwithin or close to areas of high traffic density, where the feverish state of competition between airlines is likely to make the heaviest 121 call on their services. Currently, they are based on London, Rome,Beirut, Cairo, Hong Kong, New York, Lima and Buenos Aires; but this is no indication of their precise whereabouts, for as soonas an urgent and important call comes in for intervention their chief sends them scurrying to the scene of the emergency. Fastaction of this kind in bringing disputes between Association mem- bers to a head or forcing an offending company into the open byfocusing attention on its activities can (and does) often save the airline industry millions of dollars in revenue that might otherwisebe needlessly lost in futile rate-cutting. This is the kind of situa- tion in which the enforcement office is seen in its most favourablelight. But often an investigator must report violations of rules which are universally unpopular and needlessly restrictive andexist only upon the insistence of one or two governments. In these circumstances he is as welcome as the policeman who towedaway your parked car while you were doing your Christmas shop- ping. The enforcement officer is allowed a margin of discretionhowever and is expected to exercise common sense in differen- tiating between, say, an isolated violation of minor importance(which might be pointed out to the local official in charge for educational purposes) and systematic lapses of a similar natureover a long period. IATA traffic conference resolutions cover virtually every stageof the sale and carriage of airline passenger and cargo traffic, from advertising and tariff publication through ticket or waybill issuanceto refund or rerouting; from airport bus charges through baggage handling to cabin service. While every aspect of sale and traffichandling is subject to scrutiny by the enforcement officer to check compliance with regulations, he rarely has time to do more than THE STATED AIMS OF IATA To promote safe, regular and economical air transport for the benefit of the world, to foster air commerce and to study the problems connected therewith; To provide means for collaboration among the air transport enterprises engaged directly or indirectly in international air transport service; To co-operate with the International Civil Aviation Organization and other international organizations. concentrate on the most important of them. His audit is usuallyconfined to a representative period of his choice during the previous year or eighteen months and a few unheralded visits tothe airport are normally sufficient for spot checks on the handling of passengers, baggage and cargo. In-flight inspections (on seatingpitch, menus, giveaways, correct seating of passengers in appro- priate class) are usually confined, for economy reasons, to journeysnecessitated by other business (for IATA's policy has always been to pay in full for staff travel on duty).The authority of the enforcement office is derived directly from IATA conference provisions, the very backbone of traffic confer-ence rules of conduct. Such rules are set by the executive com- mittee under authority delegated by the general meeting—thename given to the full membership as represented respectively by the most senior executive in each company. A special enforce-ment sub-committee of the executive committee occupies itself with the long-term policy of the department and is responsiblefor making recommendations for amendments in its terms of reference. Most violations come to the notice of the enforcement officein one of two ways. An offender might be reported by a com- petitor whose sales are being affected by the breach of rules, orthe matter might be first noticed by an enforcement staff member in the course of a routine audit. In both instances the chiefenforcement officer requires full documentary evidence before passing a report to his staff lawyer for legal drafting. Thiswill subsequently be forwarded to the director-general, who, in his own name, sends it as a "complaint" to the chief executiveof the company cited. To be valid, the incident forming the substance of the complaint must have occurred less than two yearsprior to the date of receipt by the director-general. Some quite serious violations have had to be dropped because their detailednature involved such lengthy and time-consuming inquiries that they were overtaken by this statute of limitations. It is up to thedirector-general to decide, upon receipt of the cited airline's reply, whether the matter justifies inclusion among the other complaintsto be heard by the following breaches commission. Breaches commissions are convened about three times a yearin New York, London or Paris. The three sitting members, including a chairman, are drawn from the top management ofcompanies not involved in the proceedings. This is an onerous task for which the only reward is the satisfaction of knowing thata contribution is being made to the maintenance of ethical com- petition and the health of the industry as a whole. To begin
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