Flag pride ‘is killing airlines’

Governments shielding their national-flag airlines are “killing” the aviation industry, the head of the International Air Transport Association (Iata) has warned.

Giovanni Bisignani, chief executive of Iata, warned that protectionist attitudes towards flag carriers were exacerbating the current downturn in the industry. Soaring oil prices and slowing economies are worrying airlines, which have raised capacity by buying aircraft but now struggle to fill them.

“Governments around the world … say they cannot lose their flag carrier. I am always telling them that the flag on the tail is killing our industry,” he said. Profit forecasts for the industry for 2008 have been slashed from $7,8-billion to $5-billion. Bisignani said financial difficulties were forcing one airline a month out of the Iata.

“We have too much capacity,” he said. “Yields are down and we need to consolidate.” Consolidation is impossible, however, because countries such as the US ban majority ownership of airlines by foreign firms. British Airways has been barred from taking over Spain’s flag carrier, Iberia, and had to join a Spanish-led consortium.

The next battleground is expected to be the second phase of the “open skies” agreement that liberalises air travel between the US and the European Union. Talks on this stage begin in May, with ownership at the top of the agenda.

The Iata boss also criticised the United Kingdom’s Civil Aviation Authority after it significantly raised landing fees at Heathrow and Gatwick airports. “You have a phantom regulator … that allows a 40% margin at [airport owner] BAA, that allows Heathrow to be the worst airport in Europe,” he said. – Â

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