'Flight prices could plummet'

Johannesburg - The International Air Transport Association (Iata) says the price of air tickets could drop 22% if governments abolish bilateral agreements regulating airlines.

Iata chief executive Giovanni Bisignani says the bilateral way of doing things is outdated and impairs airlines' optimal operation. Such agreements regulate, for instance, the number of flights an airline may make to a specific country each day. He would prefer the market to regulate itself without government intervention.

Bisignani says new Iata research indicates that abolishing these regulations could also boost countries' gross domestic product as much as 0.89%.

Worldwide, Iata represents airlines that are together responsible for 93% of global air traffic.

This week the organisation announced a multilateral policy document signed by airlines representing up to 60% of the global market.

The document contains three principles - namely airlines' access to capital markets, the opening up of national airspace for airlines to conduct business without restriction, and greater freedom for airlines to determine tariffs themselves.

South African Airways (SAA) also makes use of existing bilateral agreements.

SAA spokesperson Vimla Maistry says the policy of open airspace proposed by Iata will be essential for SAA if it is to grow further in important markets.

But a change of policy is the prerogative of government and SAA will need to have discussions with its shareholder on the potential benefits of the change.

- Sake24.com

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