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Eddington calls for ‘major rationalisation’ in aviation
Thursday, 16 May, 2006
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Retired British Airways chief Sir Rod Eddington has warned the commercial aviation industry is unsustainable without major rationalisation, and called for more open skies to hasten consolidation.
According to reports in his native Australia, Eddington said he was convinced that the industry was not viable with more than 300 carriers operating around the world. The nationality clauses in the bilateral agreements that restricted access to routes to carriers not from one of the destination countries were a major impediment to the goal of industry rationalisation.
Globally, the airline industry has racked up losses of $43.6 billion since 2001, as it has been hit by terrorism, war in Iraq, SARS and high oil prices.
This year, it is forecast to have a worldwide loss of $2.2 billion on revenues of $449 billion before turning the corner into profitability in 2007, according to the International Air Transport Association.
He added regarding the industry’s global economic performance, “the kindest thing you could say about it is poor”.
“The bottom line is that globally airlines have lost more money since 9/11 than they made in the 100 years before that, so the industry is massively flawed in economic terms.
“It’s the nationality clause in the aviation bilaterals which are in my view at the heart of the fragmentation of the industry,” Eddington said.
“It shouldn’t matter to governments who owns and controls the airline. What should matter . . . is where those same airlines create employment and wealth, and do they do a good job in providing a service.”
Eddington, famous for his quote about Ansett, “Great airline, lousy business”, said the advantages of deregulation were apparent in Europe, where carriers were free to fly on any route, regardless of their country of origin.
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