IATA confirms it will not fight ACCC — airlines decry lack of backup plan

Friday, 15 September 2006

Meeting with the ACCC in Sydney yesterday, representatives from the Australian Federation of International Forwarders (AFIF), the Customs Brokers Federation Council of Australia (CBFCA), the Confederation of Asia Pacific Express Carriers (CAPEC) and a four-man delegation from the International Air Transport Association (IATA) headquarters in Geneva discussed the ramifications of an impending ACCC ruling on IATA operations in Australia.

AFIF and CBFCA had requested the ACCC schedule a pre-determination meeting to hear views from all interested parties, including IATA,trade bodies, legal representatives and airlines.

There was little if any consultation with airlines and stakeholders before IATA resolved not to contest any ultimate decision the ACCC may hand down in respect of IATA business practice (see Aircargo Asia-Pacific issue 163 September 2006). This was done because IATA had learned from its experience in Europe operating outside immunity from competition laws and wanted to explore the opportunity in Australia. Importantly, there are provisions within Australian competition laws that are significantly different to the EU.

The eleventh hour bid to save the CASS and interline system in Australia resulted in IATA clarifying the approach it was taking in proposing a timetable for removal of the exemption it currently enjoys from the ACCC and to accept a ruling agreeing to withdraw its blanket exemption to any ACCC ruling due to be handed down by the government watchdog, following its investigation into IATA business practice.

IATA will instead review every resolution that affects the IATA program in Australia to bring it into line with ACCC guidelines. IATA will be seeking specific exemption for those parts of the program that may concern the ACCC but which airlines and agents believe are essential. In the case of some IATA resolutions that have been in effect for many years and are no longer seen as relevant, they will be scrapped. For example, the current ruling on agent payment default to an airline requires all carriers to put the defaulting forwarder on to a cash-only basis. In practice this does not happen and the actual resolution has never been used. It clearly runs contrary to ACCC guidelines and will be retired following understandings achieved yesterday.

AFIF, the CBFCA & CAPEC, represented by AFIF chairman Fritz Heinzmann, expressed strong support for the retention of CASS. AFIF said previous concerns it had expressed to the ACCC about the IATA program were no longer applicable.

IATA outlined its objective to keep in place systems and programs which operate worldwide and produced "significant benefits" for the citizens of those countries where it was working. IATA reiterated that while it might not fully share all points in the ACCC analysis in the draft determination, it supported the ultimate outcome of that determination. IATA said it realised the need to operate in future, to the extent possible, in a non-protected environment. IATA gave the meeting an undertaking to complete a self-assessment of its programs and to consult with relevant Australian industry groups.

IATA will revert to the ACCC by mid-March next year to indicate how it was proceeding.

IATA told the meeting it would provide a timetable for that process consistent with its undertaking to the ACCC to report by mid-March.

Airline representatives leaving the meeting yesterday said they were concerned that IATA did not seem to have an alternative plan to present to the ACCC in the event that the ACCC maintained its current position when it handed down its ruling.

"Nothing has really changed," said one senior executive, "all the meeting achieved was that everyone gained a much clearer picture of the issues and ramifications of decisions that may or may not be made."

Many also thought the May deadline for IATA to reassess its Cargo Agency Program was a big call and doubted if it could be achieved within the timeframe. This prompted AFIF CEO, Brian Lovell, to raise the issue with ACCC. He asked that in the event of IATA not completing its assessment by the May deadline, would the ACCC grant an extension. The ACCC said it would assess any deadline extension request if and when it was made.

A spokesperson for the ACCC said the watchdog would consider the information presented at the pre-decision conference when making its final decision.