Air freight industry split over approach to liberalisation

Date: 27/05/1999

By Renée Cordes

EUROPE'S freight companies and airlines are locking horns over whether air cargo should be included in the next round of world trade talks or left to bilateral negotiations between companies and countries.

The European Air Shippers' Council, along with a host of freight companies such as United Parcel Service, insist that agreements to liberalise the sector should be included in the next round of World Trade Organisation talks.

They argue that although Europe has taken the lead in opening up its markets to outside competitors in areas such as computer reservation systems and baggage-handling operations, other trade blocs have been reluctant to follow suit.

Until now, any moves to liberalise the sector have had to be agreed on a bilateral basis and it has proved difficult to persuade some countries, such as Japan, to accept the need for market-opening.

The European Air Shippers' Council believes that the only way to do this is to get a global agreement on liberalisation measures, and has been calling for air cargo and other transport sectors to be included within the WTO's remit since 1995.

It is stepping up pressure now as the autumn deadline approaches for governments to decide what topics should be included on the agenda for the next round of global trade talks, which are due to begin on 30 November.

The move has, however, run into opposition from Europe's air carriers, which are transporting a growing volume of freight in their passenger aircraft. They argue that multilateral agreements are often watered down to please everyone and are therefore not as effective as bilateral deals.

They also fear that focusing on such a specific issue could make it harder to get a wider EU-US deal on a broad range of topics such as airline ownership and routes.

Kees Veenstra, deputy secretary-general of the Association of European Airlines (AEA), said that bilateral talks had been effective in regulating air cargo and that a global deal might not be tough enough. "It would take away the security which we have through bilateral air service agreements," he insisted.

It is not just the airlines which have voiced concern about taking a global approach. Some cargo companies, including Federal Express, also favour bilateral talks.

The debate comes as air cargo companies around the world, hit by weak export markets, are increasingly forming joint ventures to cut costs. While there was a 6.4% growth in passenger traffic among AEA members last year, cargo traffic increased by only 0.3% per tonne kilometre, the lowest annual growth rate since 1991.

Deutsche Post is planning to take a majority stake in German express firm trans-o-flex Schnell-Lieferdienst, while SAirGroup and Panalpina are working on a new air cargo joint venture.

The Organisation for Economic Cooperation and Development (OECD) has invited industry experts and regulators to a meeting next month to explore the merits of both the multilateral and bilateral approaches.

The European Commission is also planning its second symposium on the issue in the coming months.