Wednesday, June 8, 2011

"The Cracked Record"........ Legacy Carriers vs. GCC Carriers

It flared up again, the accusations and arguments and counter arguments in the IATA AGM in Singapore (click here for full story). Mr. Giovanni Bsignani the outgoing Director General of IATA called for an end of the dispute between Gulf carriers and European/North American carriers in a civilized manner. He pointed out that the solution to call governments as advocates or referees has not worked and will not work and as responsible leaders of this global industry we should find a resolution by ourselves.

Of course, Air Canada will not have any of this and the litany of the Gulf carriers being supported by their governments as if Air Canada is not the darling of the Canadian Government the only difference is that the governments of the UAE and Qatar embrace an open sky regime while the government of Canada has one of the most noncompetitive and restrictive policy (read my blog Canada's Air Transport Competitiveness) Air Canada was supported by Austrian, a subsidiary of Lufthansa that has a record of opposing entry allowed under EU open sky agreements.

The problem lies in the fact that the Legacy carriers of Europe and North America are not able to match the growth of the Gulf carriers. I agree that they are at a disadvantage but it is not caused by government, it is caused by location, location location. The Ultra Range aircraft shifted the geographical center of aviation from Europe to MENA and the Gulf and allowed the carriers of the region to become real global airlines. The UAE and Qatar have always been open economies, yes they have requirements for local partners but they also have free zones that allow foreign companies to operate without a local partner.

So far the Europeans and the North American carriers have elected to lobby their governments to limit access for almost every airline from MENA. This is a failed policy, they forget that the Gulf carriers are developing markets in South America, Africa, the CIS and Asia locations where their governments have no influence.

The lack of innovative thinking and problem solving is indicative of organisations that have been very comfortable for a long time with the status quo and are at loss when the world changed. As long as these carriers bury their heads in the sand and go screaming to their governments there will be no solution. These Gulf carrier add value to the destinations they serve, they advertise them as holiday destinations something that the European and North American governments on the whole don't do.

So far no one knows exactly what they want other than stop the rapid growth of the Gulf carriers, in their countries, but would the threat go away when these carriers dominate traffic in Africa, South America and shut them out of there. I don't think so

The solution is to stop accusations and counter accusations and sit down and work equitable solutions that are win win.

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