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International Air Transport Association

Coordinates: 45°30′02″N 73°33′42″W / 45.5006°N 73.5617°W / 45.5006; -73.5617
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"IATA" redirects here. For other uses, see IATA (disambiguation).
Not to be confused with International Civil Aviation Organization or Air Transport Association of America.

International Air Transport Association
AbbreviationIATA
Formation19 April 1945; 79 years ago (1945-04-19) in Havana, Cuba
TypeInternational trade association
Headquarters800 Square Victoria
Montreal, Quebec
Canada[1]
Membership317 airlines (2023)[2] from over 120 countries and regions[3]
Willie Walsh
Websiteiata.org

The International Air Transport Association (IATA /aɪˈɑːtə/) is a trade association of the world's airlines founded in 1945.[4] IATA has been described as a cartel since, in addition to setting technical standards for airlines, IATA also organized tariff conferences that served as a forum for price fixing.[5][6]

According to IATA, as of 2023 it represents 317 airlines,[2] including major carriers, from over 120 countries.[3] The IATA's member airlines account for carrying approximately 82% (2020)[7] of total available seat miles air traffic. IATA supports airline activity and helps formulate industry policy and standards. It is headquartered in Montreal, Canada with executive offices in Geneva, Switzerland.[8]

History

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IATA was formed in April 1945 in Havana, Cuba. It is the successor to the International Air Traffic Association, which was formed in 1919 at The Hague, Netherlands.[9][10] At its founding,[which?] IATA consisted of 57 airlines from 31 countries. Much of IATA's early work was technical and IATA provided input to the newly created International Civil Aviation Organization (ICAO), which was reflected in the annexes of the Chicago Convention in 1944, the international treaty that still governs international air transport.

IATA headquarters in Montreal (Tour de la Bourse)

The Chicago Convention did not result in a consensus on the economic regulation of the airline industry. According to Warren Koffler, IATA was formed to fill the resulting void and provide international air carriers with a mechanism to fix prices.[11]

In the late 1940s, IATA started holding conferences to fix prices for international air travel. IATA secretary J.G Gazdik stated that the organization aimed to fix prices at reasonable levels, with due regard being paid to the cost of operations, in order to ensure reasonable profits for airlines.[12]

In 1947 at a time when many airlines were government-owned and loss-making, IATA operated as a cartel, charged by the governments with setting a constrained fare structure that avoided price competition.[13] The first Traffic Conference was held in 1947 in Rio de Janeiro and reached unanimous agreement on some 400 resolutions.[14][non-primary source needed] IATA Director-General William Hildred recounted that about 200 of the resolutions at the Rio de Janeiro conference were related to establishing a uniform structure for tariffs charged for international air transportation.[15]

The American Civil Aeronautics Board did not intervene to stop IATA's price fixing, and in 1954 law professor Louis B. Schwartz condemned the board's inaction as an "abdication of judicial responsibility".[16] The Economist lambasted IATA's connivance with governments to fix prices and compared IATA with medieval guilds.[17]

In the early 1950s IATA's price fixing regime forced airlines to attempt to differentiate themselves through the quality of their passenger experience.[18] IATA responded by imposing strict limits on the quality of airline service.[19] In 1958, IATA issued a formal ruling barring airlines from serving economy passengers sandwiches with "luxurious" ingredients.[20][21] The economist Walter Adams observed that the limited service competition permitted by IATA tended to merely divert traffic from one air carrier to another without at the same time enlarging the overall air transport market.[22]

From 1956 to 1975, IATA resolutions capped travel agent commissions at 7% of the airline ticket price. Legal scholar Kenneth Elzinga argued that IATA's commission cap harmed consumers by decreasing the incentive for travel agents to offer improved service to consumers.[23]

By the late 1970s, IATA's price fixing regime was seen as unattractive by many airlines. As a result, major airlines, like Singapore Airlines and Pan-American Airlines, chose to forgo IATA membership.[24]

Market share

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In 1973, 94% of international scheduled passenger traffic flew on IATA carriers.[25]

Market control mechanism

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During its time as a cartel, IATA set the fares that IATA carriers charged and enforced them with quasi-governmental powers;[26] it was backed by most relevant governments by making IATA fares a requirement of air service agreements between countries.[27] In the case of the US, the Civil Aeronautics Board (CAB, the now-defunct Federal agency that, at the time, regulated almost all US commercial air transport) also provided IATA with a waiver from US antitrust laws.[28] Plus, most IATA airlines were majority government owned[29] and even some privately-owned IATA members were under government control.[30] The biggest non-IATA carriers, like Aeroflot, tended to nonetheless charge IATA fares, but a few, such as such as Loftleidir Icelandic, offered below-IATA prices.[31]

Charter competition

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The real competition to the IATA cartel system were the charter carriers, which in 1972 accounted for up to 28% of international traffic, with prices set by supply and demand.[32] IATA "special fares" (discounts from standard fares) were mostly a reaction to charter competition.[33] IATA competition with charter carriers was complex and to some degree hypocritical: some IATA carriers had non-IATA subsidiaries offering charters that IATA carriers could not,[34] for example, Lufthansa's Condor subsidiary or Air France's Air Charter International.[35]

Illegal rebates

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IATA members engaging in illegal rebating on their IATA-set scheduled fares. In the early 1970s, there were a half billion dollars in annual illegal transatlantic scheduled fare rebates uncovered in a US Department of Justice investigation that resulted in fines and consent decrees from 19 airlines Pan Am, Trans World Airlines and most European flag carriers (e.g. Air France, Lufthansa, British Airways, KLM, etc). The investigation started when a travel agent was discovered entering the US with $80,000 hidden in his socks, which he admitted was a rebate.[36]

In 1982, the sociologist John Hannigan described IATA as "the world aviation cartel".[5] IATA enjoyed immunity from antitrust law in several nations.[11]

To prevent Laker Airways from disrupting IATA's price fixing regime, IATA members allegedly used a 1977 to conspired to undercut prices on shared routes, seeking to bankrupt Freddie Laker's airline. Laker Airways bankruptcy estate later asserted claims against IATA members under the American Sherman and Clayton antitrust acts.[37][38]

In 2006, the United States Department of Justice adopted an order withdrawing the antitrust immunity of IATA tariff conferences.[39][40]

In March 2020, the COVID-19 pandemic interrupted routine flights around the world. In the immediate aftermath most airlines, because of the physical distancing policies implemented by national governments, reduced their seat loading by eliminating the sale of the middle seat in a row of three. This reduction averaged out to a load factor of 62% normal, well below the IATA industry break-even level of 77%. Fares would need to rise as much as 54% if a carrier were to break even, according to calculations done by the IATA, who posit that because of "forward-facing seats that prevent face-to-face contact, and ceiling-to-floor air flows that limit the circulation of respiratory droplets" the risk of transmission is reduced. North American carriers such as WestJet, Air Canada and American Airlines all planned to resume normal pattern sales on 1 July 2020.[41] This industry-driven policy garnered immediate push-back from some Canadians, including those who felt defrauded, while Minister of Transport Marc Garneau noted that the "on-board spacing requirement is a recommendation only and therefore not mandatory" while his Transport Canada department listed physical distancing as a prophylactic among the key positive points in a guide prepared for the Canadian aviation industry.[42]

Chief executives

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Focus areas

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Safety

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IATA states that safety is its highest priority.[44] The main instrument for safety is the IATA Operational Safety Audit (IOSA). IOSA has also been mandated at the state level by several countries.[specify] In 2017, aviation posted its safest year ever, surpassing the previous record set in 2012. The new global Western-built jet accident rate became the equivalent of one accident every 7.36 million flights.[45] Future improvements will be founded on data sharing with a database fed by a multitude of sources and housed by the Global Safety Information Center. In June 2014, the IATA set up a special panel to study measures to track aircraft in flight in real time. The move was in response to the disappearance without a trace of Malaysia Airlines Flight 370 on 8 March 2014.[46]

Simplifying the Business

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Simplifying the Business[47] was launched in 2004. This initiative has introduced a number of crucial concepts to passenger travel, including the electronic ticket[48] and the bar coded boarding pass. Many other innovations are being established as part of the Fast Travel initiative, including a range of self-service baggage options.

An innovative program, launched in 2012 is New Distribution Capability (NDC).[49] This will replace the pre-Internet EDIFACT messaging standard, which is still the basis of the global distribution system and travel agent channel, with an XML standard.[50] This will enable the same choices to be offered to high street travel shoppers as are offered to those who book directly through airline websites. A filing with the US Department of Transportation brought over 400 comments.[51][52]

Environment

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IATA members and all industry stakeholders have agreed to three sequential environmental goals:[53][54]

  1. An average improvement in fuel efficiency of 1.5% per annum from 2009 through 2020
  2. A cap on net carbon emissions from aviation from 2020 (carbon-neutral growth)
  3. A 50% reduction in net aviation carbon emissions by 2050 relative to 2005 levels.

At the 2013 IATA annual general meeting in Cape Town, South Africa, members overwhelmingly endorsed a resolution on "Implementation of the Aviation Carbon-Neutral Growth (CNG2020) Strategy."[55] A representative for the European Federation for Transport and Environment criticized the resolution for relying on carbon offsets instead of direct reductions in aviation carbon emissions.[55]

Services

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IATA provides consulting and training services in many areas.

Publications - standards

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A number of standards are defined under the umbrella of IATA. One of the most important is the IATA DGR[56] for the transport of dangerous goods (HAZMAT) by air.

See also

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References

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  1. ^ "IATA – Office Addresses & Telephone Numbers". Retrieved 23 September 2023.
  2. ^ a b "Current Airline Members". International Air Transport Association. Archived from the original on 21 October 2023. Retrieved 21 October 2023.
  3. ^ a b "IATA Members". International Air Transport Association. Archived from the original on 10 October 2023. Retrieved 21 October 2023.
  4. ^ Wragg, David W. (1973). A Dictionary of Aviation (first ed.). Osprey. p. 164. ISBN 9780850451634.
  5. ^ a b Hannigan, John A. (1982). "Unfriendly Skies: The Decline of the World Aviation Cartel". The Pacific Sociological Review. 25 (1): 107–136. doi:10.2307/1388890. ISSN 0030-8919. JSTOR 1388890. S2CID 158297510.
  6. ^ Doganis, Rigas (2019). Flying Off Course: Airline Economics and Marketing. Routledge. p. 29. ISBN 978-1138224230. There can be little doubt IATA was effectively a suppliers cartel
  7. ^ biopharma-reporter.com (11 September 2020). "Delivering COVID-19 vaccines safely will be the 'mission of the century' for air cargo industry". biopharma-reporter.com. Retrieved 1 April 2021.
  8. ^ "International Air Transport Association". CAPA Centre for Aviation (Informa). Archived from the original on 11 October 2023. Retrieved 21 October 2023.
  9. ^ Sebastian Höhne. "IT in general Aviation: Pen and Paper vs. Bits and Bytes" (PDF). hoehne.net. p. 38. Archived (PDF) from the original on 8 March 2014. Retrieved 5 May 2014.[better source needed]
  10. ^ "International Air Transport Association (IATA) - OECD" (PDF). Archived (PDF) from the original on 18 February 2023.
  11. ^ Gazdik, J.G. Rate-Making and the IATA Traffic Conferences . Journal of Air Law and Commerce, vol. 16, no. 3, Summer 1949, pp. 298–322.
  12. ^ Koffler, Warren W (1 January 1966). "IATA: Its Legal Structure - A Critical Review". Journal of Air Law and Commerce. 32 (2): 222. IATA is an international trade association which is cartel-like in a number of its operations. [] IATA is an international monopoly, or cartel, by either classic or modern definition. While its stated purpose is to create economic air transport, its actual operation has set prices at a level sufficient to support the least efficient of its carrier members. [] [IATA] members' governments have sent their technical experts to a meeting to negotiate the price of a commodity. These men, in the employ of their governments directly or indirectly, have been fully instructed before their departure.
  13. ^ "IATA - Early Days". www.iata.org. Retrieved 11 January 2023.
  14. ^ Hildred, William P. "International Air Transport Association: II." Air Affairs, vol. 2, no. 3, July 1948, pp. 364–379.
  15. ^ Schwartz, Louis B. (1954). "Legal Restriction of Competition in the Regulated Industries: An Abdication of Judicial Responsibility". Harvard Law Review. 67 (3): 436–475. doi:10.2307/1336965. ISSN 0017-811X. JSTOR 1336965.
  16. ^ "Clearing the Air". The Economist. Vol. 200, no. 6149. 1 July 1961. p. 63.
  17. ^ Salin, Pascal (1996). "Cartels as efficient productive structures". The Review of Austrian Economics. 9 (2): 29–42. doi:10.1007/BF01103328. S2CID 154931354.
  18. ^ McGoldrick, John Lewis. Regulation of Service Competition in International Air Travel [1] Harvard International Law Journal , vol. 8, no. 1, Winter 1967, pp. 78-115.
  19. ^ Freidlander, Paul (27 April 1958). "Sandwich Settlement". New York Times. pp. 2–1.
  20. ^ Tauber, Ronald S. Enforcement of IATA Agreements. Harvard International Law Journal , vol. 10, no. 1, Winter 1969, pp. 1–33.
  21. ^ Adams, Walter (1958). "The Role of Competition in the Regulated Industries". The American Economic Review. 48 (2): 527–543. ISSN 0002-8282. JSTOR 1816944.
  22. ^ Elzinga, Kenneth G. The Travel Agent, the IATA Cartel, and Consumer Welfare. Journal of Air Law and Commerce, vol. 44, no. 1, 1978, p. 47.
  23. ^ Heller, Paul P. Recent Developments in Air Transport Regulation New Zealand Recent Law, vol. 4, no. 5, June 1978, pp. 210-216
  24. ^ Haanappel, Peter P.C. (1978). Ratemaking in International Air Transport. Deventer, Netherlands: Kluwer. p. 2.
  25. ^ Haanappel 1978, p. 62–63.
  26. ^ Haanappel 1978, p. 9.
  27. ^ Haanappel 1978, p. 44.
  28. ^ Haanappel 1978, p. 153–154.
  29. ^ Haanappel 1978, p. 2.
  30. ^ Haanappel 1978, p. 106.
  31. ^ Haanappel 1978, p. 1.
  32. ^ Haanappel 1978, p. 96.
  33. ^ Haanappel 1978, p. 114.
  34. ^ Haanappel 1978, p. 6.
  35. ^ Oversight of Civil Aeronautics Board Practices and Procedures: Hearings Before the Subcommittee on Administrative Practice and Procedure of the Committee on the Judiciary, United States Senate, Ninety-Fourth Congress, First Session (Report). Vol. 2. Washington, DC: U.S. Government Printing Office. 1975. pp. 979–981. hdl:2027/uiug.30112106910083.
  36. ^ Moore, Richard Hancock. The Laker Jurisdictional Affair: The Judiciary Temporarily Avoids a Political Showdown. Wake Forest Law Review, vol. 20, no. 4, August 1984, pp. 951-974. HeinOnline
  37. ^ Friedman, Aryeh S. Laker Airways: The Dilemma of Concurrent Jurisdiction and Conflicting National Policies. Brooklyn Journal of International Law, vol. 11, no. 2, Spring 1985, pp. 181-236
  38. ^ "DOT-OST-2006-25307-003". www.regulations.gov. Retrieved 26 February 2020.
  39. ^ Wojtek, Ralf (28 November 2015). "UPU compensation rates for packages under EU competition law: Are the lessons to be learned from other international fee arrangements". In Crew, Michael A.; Brennan, Timothy J. (eds.). The future of the postal sector in a digital world. Springer. p. 337. ISBN 978-3-319-24454-9. OCLC 930703336.
  40. ^ Atkins, Eric (26 June 2020). "WestJet and Air Canada to start selling middle seat on flights as of July 1". The Globe and Mail Inc.
  41. ^ Jones, Ryan Patrick (28 June 2020). "Critics not on board with airlines' decision to relax in-flight physical distancing during COVID-19". CBC.
  42. ^ "IATA's Leaders over the Years". www.iata.org. Retrieved 3 October 2023.
  43. ^ "Safety". www.iata.org. Retrieved 7 August 2020.
  44. ^ Oliver Smith. "2017 was the safest year in aviation history – but which was the deadliest?". The Telegraph. Archived from the original on 12 January 2022. Retrieved 11 January 2018.
  45. ^ "IATA wants new airline tracking equipment". Malaysia Sun. Archived from the original on 14 July 2014. Retrieved 10 June 2014.
  46. ^ Gouldman, Anna (25 April 2005). "Airlines to Scrap Paper Tickets by 2007: Industry Feedback". Breaking Travel News. Retrieved 18 November 2013.
  47. ^ Greenwood, Gemma (27 August 2007). "IATA makes final paper ticket order". Arabian Travel News. Retrieved 18 November 2013.
  48. ^ Boehmer, Jay (18 October 2012). "IATA Votes To Adopt New Distribution Standards". The Beat. Retrieved 18 November 2013.
  49. ^ IATA. Cargo-XML Standards: Modernizing air cargo communication.
  50. ^ Vanasse, Zachary-Cy (1 May 2013). "New Distribution Capability Or New Industry Model?". Travel Hot News. Archived from the original on 6 May 2013. Retrieved 18 November 2013.
  51. ^ Orukpe, Abel. "IATA urges stakeholders to collaborate, give passengers value". Daily Independent. Archived from the original on 15 March 2013. Retrieved 18 November 2013.{{cite news}}: CS1 maint: unfit URL (link)
  52. ^ "Carbon-Neutral Growth by 2020". IATA. 8 June 2009. Archived from the original on 14 April 2021. Retrieved 27 June 2020.
  53. ^ "Climate Change". IATA.
  54. ^ a b Harvey, Fiona (4 June 2013). "Airlines agree to curb their greenhouse gas emissions by 2020". The Guardian. Retrieved 18 November 2013.
  55. ^ IATA (ed.), Dangerous Goods Regulations
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