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Aviation History
2003
2003 - 0656.PDF
FULL LIST OF READER SERVICES & ADVERTISER CONTACTS - P102 COMMENT EDITORIAL + 44 (20) 8652 3842 Quadrant House, The Quadrant, Sutton, Surrey SM2 5AS, UK Fax +44 (20) 8652 3840 email fligMMemationambi.co.uk Editor Murdo Morrison +44 (20) 8652 4395 murdo.mornson@rbi.co.uk Editorial Assistant Andrew Costerton +44 (20) 8652 3835 anirew.costerton@rbi.co.uk News Editor Andrew Doyle +44 (20) 8652 3096 andrevt.doyle@rbi.co.uk Commercial Aviation Editor Max Kingsley-Jones +44 (20) 8652 3825 max.kingsleyjones@rbi,co.uk Defence Aviation Editor Stewart Penney +44 (20) 8652 3834 stewart.penney@rbi.co.uk Operations/Safety Editor David Learmount +44 (20) 8652 3845 david.learmount@rbi.co.uk Business Editor Alexander Campbell +44 (20) 8652 3990 alexander.campbell@rbi.co.uk Business & General Aviation Editor Kate Sarsfield +44 (20) 8652 3885 kate.sarstield@rbi.co.uk Reporter Justin Wastnage +44 (20) 8652 3S63justin.wastnage@rbi.co.uk Technical Reporter Michael Phelan +44 (20) 8652 3843 michael.phelan@rbi.co.uk Spaceflight Correspondent Tim Furniss +44 (1237) 471960 tim@spaceport.co.uk Senior Technical Artist Giuseppe Picarella +44 (20) 8652 8054 joe.picarella@rbi.co.uk Editorial Artist Tim Brown +44 (20) 8652 8043 Um.brown@rbi.coMk EUROPE/MIDDLE EAST European Editor Christina Mackenzie +33 (1) 64 23 68 89 christina.mackenzie@rbi.co.uk Israel Correspondent Arie Egozi +972 (3) 9413132 AMERICAS Washington DC Office Fax +1 (703) 836 8344 Americas Editor Graham Warwick +1 (703) 836 3448 graham.warwick@rbi.co.uk East Coast Editor Paul Lewis +1 (703) 836 3084 jpaul.lewis@rbi.co.uk West Coast Editor Guy Norris +1 (949) 252 8971 Fax +1 (949) 252 8972 guy.norris@rbi.co.uk Brazil Correspondent Jackson Flores Jr +55 212439-6062 Fax 00 55 212349-6090 fubar@uol.com.br Canada Correspondent Brian Dunn ASIA/PACIFIC Singapore Office Fax +65 6789 7575 Regional Managing Editor Nicholas lonides +65 6780 4311 nicholas.ionides@rbi.co.uk Deputy Asia Editor Brendan Sobie +65 6780 4309 brendan.sobie@rbi.co.uk Regional Reporter Leithen Francis +65 6780 4314 leithen.francis@rbi.co.uk Australia Civil Aviation Correspondent Emma Kelly +61(8)92861724 Fax+61 (8) 92861724 emmajkelly@bigpond.com Australia Military Aviation Correspondent Peter La Franchi +61 (0) 419 246 620 Fax +61 (2) 62312795 nutka@ozemait.com.au EDITORIAL PRODUCTION Group Production Editor Graeme Osborn +44 (20) 8652 3828 Group Art Editor James Mason +44 (20) 8652 4994 Chief Sub-Editor Chris Thornton +44 (20) 8652 4997 Deputy Production Editor Jackie Thompson +44 (20) 8652 3850 Sub Editor Megan Turner +44 (20) 8652 3848 Photographer Mark Wagner +44 (20) 8944 5225 WWW.FLIGHTINTERNATIONAL.COM Webmaster Sheena Buchanan +44 (20) 8652 4432 SUBSCRIPTIONS +44 (1444) 445454 rbi.subscriptions@rbi.co.uk THE FLIGHT COLLECTION kim.hearn@rbi.co.uk © and Database Rights 2003 Reed Business Information Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission in writing of the publishers pr^P 7 Air Transport Intelligence (ATI), Flight International's sister J-\ J J online service at www.rati.com, contains the full text of Flight mmuBBEBBBn Inlernationaland Airline Business since 1996. Full text of the magazines can also be found online with Lexis-Nexis, Dialogue, FT Profile, IAC and Reuters. Editor Kieran Daly +44 (20) 8652 3837 Reed Business Information The 60-year itch Airlines are saddled with an outmoded international regulatory system. ICAO is giving them the opportunity to throw it off, but will they dare? Flags of convenience have not, so far, been a choice for airlines. The idea, however, has struck sufficient fear into enough hearts to enable regulators and established airlines to use it as an excuse for not reviewing the con ventions that have controlled international aviation for nearly 60 years. This has been merely the most emotive of a range of reasons for not examining better alternatives. Others include the wishes of governments that own flag carriers to control the competition they face and the fares they charge. In calling its just-finished seminar "The chal lenges and opportunities of liberalisation", the International Civil Aviation Organisation is showing its impatience with the industry for fail ing to innovate and is trying to persuade them to confront the possibilities for change. The USA began its domestic deregulation process in 1978 and completed the disman tling of the old Civil Aeronautics Board in 1983. It has taken the latest industry crisis to force the airlines to look for another way It seems unbelievable now, but the old rules vir tually confined Southwest Airlines to its home state of Texas. Deregulation allowed it to bust out of Texan state boundaries and prosper. The European Union took 15 years to deregulate "domestically", but by the new mil lennium it had done so. If international airlines, or those that serve both international and domestic markets, need an example of how deregulation's simplicity can help airlines, look at the carriers that are making profits - the low- cost, no-frills airlines - while others face bankruptcy. One reason for their success is that they only operate in deregulated market places. The regulatory simplicity and lack of restriction on management decisions about where and when they fly or what they may charge is one of the factors that enables them to offer low fares and still make a profit during a downturn. Encouraging examples of airlines operating in a quasi-deregulated international market are Singapore Airlines and Emirates. They operate from states that have more or less dumped the bilateral system, inviting all comers from overseas to serve their hubs. They, in return, can go everywhere, and all they have to worry about is competition. It has cer tainly not damaged their financial health. Meanwhile, carriers such as United Airlines and the other US majors are in trouble. Their roots were in a regulated domestic market place, and they inherited the management and workforce attitudes and the company and route structure that went with it. After deregulation they entered the international marketplace, and when they did so they acquired all the restric tions bequeathed them by the world's system of bilateral treaties and ownership restrictions. Although ICAO in 1994 first broached the subject of reform that would enable a wider lib eralisation for states that wanted it, nothing happened. Meanwhile, starting in the 1980s, some countries, pair by pair under the bilateral aviation treaty system, created open skies agreements. These benefited only the two states involved, and skies were "open" only by comparison with how restrictive they had been. It seems to have taken the latest crisis in air transport business to force the airlines, in des peration, to look for another way. After 11 September 2001 several of the US majors' senior executives voiced in public their concern that foreign investment in US carriers was not even an option because it was against the rule book. While governments in the 1980s, and 1990s were gradually relaxing the conditions and restrictions in their bilateral treaties and calling this liberalisation, the treaties them selves still exist. But the most pernicious of the rules is the ownership restriction. In order for an airline to be able to operate under a bilateral agreement it must have a definable nationality. This means majority ownership must be with citizens of its base country, which makes it easy to define which state oversees and enforces crucial standards such as safety for any given airline, and makes it easy for the senior executives to be called to account. The fear has been that, if an airline can choose the state with which it registers, it will copy the marine industry and register with nations whose standards are the least demanding. Of course, airlines must have defined national registration so operators' cer tificates can be issued or withdrawn, but the 60-year assumption that ownership is the only way to define the state of registration shows a lack of imagination that was excusable only when the industry was in its infancy. Now ICAO has laid before the world airtransport industry the opportunity to change this archaic system, the world's airlines must throw their hats into the ring and get down to making it happen. SEE AIR TRANSPORT PIO www.flightinternational.com FLIGHT INTERNATIONAL 1-7 APRIL 2003 3
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