AIRLINE VIEWS ON THE PROPOSED GATS TOURISM ANNEX

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AIRLINE VIEWS ON THE PROPOSED GATS TOURISM ANNEX
SYMPOSIUM ON TOURISM SERVICES WTO/OMC Geneva,
22-23 February 2001
Richard Smithies Director, Policy Analysis
Government Industry Affairs - IATA
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AIR TRANSPORT GATS TODAY

• Annex on Air Transport Services
• excludes traffic rights and all services directly
  related to their operation
• but covers CRS, Marketing Selling, Maintenance
  Repair of aircraft
• CTS to review developments coverage every 5
  years
• Bilateral system of Agreements
• basis for exclusion
• States can control liberalisation process
• maintain principles of reciprocity and fair and
  equal opportunity to compete
• offer procedures for handling disputes

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INDUSTRY VIEWS ON THE GATS

• GATS is not the vehicle for fundamental reform
• ICAO is best-qualified international agency
• to take account of AT particular characteristics
• Handle air transport on a sectoral basis
• Review offers opportunity to clarify
• scope and coverage of services directly related
  to the operation of air traffic rights
• Belief that a hybrid system can de developed
• permit multilateral bilateral arrangements to
  co-exist
• depending on regional preferences and needs

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BASIS FOR THE TOURISM ANNEX

• Tourism Travel Related Services(Cat. 9)
• covers hotels catering
• travel agencies tour operator services
• tourist guide services
• other services
• Tourism Satellite Account system adds
• air, sea, rail road passenger transport
• certain financial services
• navigational aids
• tourism information services

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WHY INCLUDE AIR TRANSPORT IN A TOURISM ANNEX?

• WTO-Tourism UNCTAD meetings
• neither body has direct responsibility for air
  transport
• only sources for this argument
• Arguments include
• need to focus on tourism sector as a whole
• anti-competitive practices in network services
• developing countries at the mercy of abuses of a
  dominant position

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WHAT ARE THE CONSEQUENCES?

• Air transport in a Tourism Annex
• Would destroy Air Transport Annex
• take out 2 of 3 services covered
• Split GATS coverage of air transport
• passenger and freight
• remove common services
• Marketing Selling only service covered
• Need to re-examine GATS legal framework

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AIRLINE INDUSTRY CHANGES

• Consequences of liberalisation
• more competition
• airline restructuring
• Changes include
• development of hubs,
• alliances commercial arrangements
• revenue management systems
• evolving distribution systems
• growing reliance on e-commerce
• Changes are limited by
• airport airspace congestion
• environmental considerations
• foreign ownership restrictions

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LIBERALISATION COMPETITION LAW

• Competition authorities
• under liberalisation they assume a more important
  role
• airlines comply with relevant competition laws
• Antitrust immunity / exemptions needed
• for airlines to agree on standards interline
  fares
• to maintain a coherent multilateral framework
• Global network of services
• taken for granted
• ensures service to every country

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DISPUTE SETTLEMENT

• GATS Air Transport Annex
• GATS dispute settlement procedures can only be
  invoked
• where commitments have been made
• when multilateral bilateral mechanism have been
  exhausted
• Bilateral air service agreements
• contain articles relating to
• anti-competitive practices
• dispute resolution
• CRS practices - two considerations
• existing regulations or codes of conduct
• some commitments for CRS exist under the GATS

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CONCLUSIONS

• A Tourism Annex is an important undertaking
• include all interested parties in the drafting
  process
• If the proposed Tourism Annex is put in place,
• it should not include any part of air transport
• IATA supports the review of the GATS Air
  Transport Annex
• conducted by the Council for Trade in Services
• in informed transparent manner