IATA chief calls for reform in Canada’s air industry

by Canadian Shipper

IATA is calling on Ottawa to change air industry regulations, to correct a structure the association says is "broken."

Giovanni Bisignani, chief executive of the International Air Transportation Association, in Montreal for ICAO’s international airline conference, said that while airlines have re-engineered themselves to bring efficiencies to their organizations, "there can’t be partners that abuse their situations". Bisignani referred not only to airports but also Nav Canada, which provide air traffic control services and charge user fees to the carriers.

“You need a very clear corporate governance on how airports are handled. You have a situation now where the airport has a licence to print money," he told reports.

Bisignani wants rule changes in several areas, including how monopoly suppliers, such as airports and air traffic controllers, are regulated; the amount airports are required to pay in rent to federal coffers; and foreign ownership limits, which at 25% in Canada are “offside” in today’s business environment, reports the Financial Post.

The IATA chief’s comments came as Air Canada is set to exit from its 18-month court-ordered bankruptcy restructuring after cutting more than $2-billion in expenses and reducing its payroll by 7,000 workers.

Bisignani is scheduled to meet today with Jean Lapierre, Canada’s Transport Minister, to plead his case. His criticism so far has been mostly focused at the management of Toronto’s Pearson International, where IATA claims

management has imposed triple-digit increases on some user fees since 2001 to finance its expansion.

Bisignani said Canada should adopt a framework used in Britain, whereby all rate increases airports and other monopoly providers, like Nav Canada, want to impose must first be approved by a regulatory oversight board.

He also wants Ottawa to oblige airports to pay annual rent, which this year will be in the $250-million range. Airport officials have cited the rent due as a major reason why they is forced to impose fee hikes.

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