Free sky deal opens way to multinational airlines

Nations representing 60 percent of global aviation endorsed Monday a plan to liberalize the flagging industry that will drive consolidation and could lead to the emergence of multinational airlines.

Chile, Malaysia, Panama, Singapore, Switzerland, the United Arab Emirates, and the United States joined the European Commission in agreeing in principle to a new set of guidelines for commercial aviation.

Signatories will allow airlines access to global capital markets, reduce market access restrictions, and give airlines more freedom in setting seat prices, said the Montreal-based International Air Transport Association (IATA).

States also agreed to consider the possibility of a multilateral agreements to waive ownership restrictions, said the IATA, a global aviation body that has been pushing for a liberalization deal.

"This is an historic achievement that will help set the foundation for a financially sustainable global aviation industry," said IATA director general Giovanni Bisignani.

"This is a strong signal that this industry's future must be realized in a much more liberal environment."

A spokesman told AFP the IATA was pushing member governments "to eliminate ownership caps" and to "allow cross border mergers and acquisitions.

"Previously, we'd seen a lot of mergers nationally, but never with foreign airlines," IATA spokesman Steve Lott explained. "Now we have a starting point for the creation of a multinational airline."

For 65 years, the airline sector has remained highly fragmented and unable to cover its capital costs. Recently its performance has been plunging with the industry losing 53 billion dollars since 2001.

National ownership rules prevented mergers of carriers across borders, and market access was restricted unless governments agreed to allow cross-border services in bilateral pacts.

via-amc/ag