India, China should lead aviation sector: IATA

India and China, emerging as giants in the global aviation industry, need to be innovative and should not follow Europe that has been lax in introducing new rules and procedures, a major aviation body has said.

India and China, which are projected to jointly control about 32 per cent of the world air traffic by 2012 "will have to be in a position to think out-of-the-box and take the lead in evolving new ground rules," International Air Transport Association (IATA) chief Giovanni Bisignani said.

In this context, Bisignani said "countries like India and China which are emerging fast as global leaders in aviation should think in a different way to make flying easy, safe, secure and profitable".

Bisignani said he wanted India and China to lead the world by bringing in new laws and procedures to meet the emerging challenges.

Referring to the delay of over two decades in implementing the "Single European Sky" project that would help in checking carbon emission to a very large extent, he said, "We have had enough of hot air (in Europe) -- it is time for political will and action." "The rules of the game were set almost 60 years ago. The issues relating to bilateral (air services) agreements, safety, security and profitability have undergone major changes," said the director general and chief-executive officer of IATA, which represents over 240 airlines that carry over 94 per cent of the worldwide air traffic.

"It is sad to see that if you want to start a new (international) flight, you require an international treaty that has to be ratified by respective Parliaments (of two countries). It makes no sense at all," he said.

Making a forceful plea for treating civil aviation as an industry with minimal governmental involvement, Bisignani said the rules of the game were completely different for other industries like petroleum, automobile or pharmaceuticals.

While these industries have not more than 20 to 50 major players worldwide, the aviation sector has about 2,000 companies, he said.

"Being a global player and still having bilateral agreements to govern your flights (to foreign destinations) is no longer going to work. There is no room left for such agreements now," the IATA chief said in his e-mail response.

Describing developments in Asia as "a great story" of the aviation industry, he said despite recording a 42 per cent year-on-year growth in capacity, the yields of Asian carriers were going down. "I don't see leadership (in Asia) to lead this massive growth of the market in the next three-four years," he said.

Asserting that bilateral agreements should be done away with, he said these agreements "made sense earlier when you wanted to defend your market and flying was not as safe which made you limit their numbers. In those days, the airlines were considered national flag carriers. But the situation has completely changed now".

The Single European Sky project was launched in 1991 and was supposed to have been implemented within three years. However, it is yet to be implemented.

"No new technology is required. What we need are leaders with vision," he said.

On the "open sky" arrangement between Europe and the United States, Bisignani said the agreement could have opened up vast potential, but "the US government did not open up".

On the major challenge posed to the aviation industry by rising fuel costs, the IATA chief said he expected the global airlines' fuel bill to rise by $14 billion dollars to $149 billion next year.

The IATA chief said once the proposed "Single European Sky" was achieved, it would save an estimated 12 million tonnes of carbon dioxide a year.

However, he maintained that "Europe has been dragging its feet for nearly two decades. We have had enough of hot air -- it is time for political will and action".

While the traffic growth was expected to slow down from 5.9 per cent in 2007 to four per cent in 2008, aircraft deliveries would rise from 1,041 to 1,281 next year.

"The peak of the business cycle is over and we are still $190 billion in debt. So we could be headed for a downturn with little cash in the bank to cushion the fall," he warned the airline industry.

Bisignani said revenues of airlines would come under pressure with yields dropping 3.5 per cent in real terms. "This is greater than the expected 3.2 per cent drop in non-fuel unit costs and partly reflects the anticipated impact of the credit crunch on corporate travel budgets," he said.

Referring to heightened security concerns, Bisignani said though security constituted a major part of the aviation agenda it was still a costly and uncoordinated mess.

"We are more secure than we were in 2001 but the annual bill is now $5.9 billion dollars which is $300 million more than our earlier estimates," he said.