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Thomas S. Windmuller IATA SVP Member&Government Relations

Thomas S. Windmuller

IATA SVP Member & Government Relations

With the Transatlantic liberalisation agreement about to be signed, the views of IATA on the agreement itself and on future air transport industries presented on TravelDailyNews by Mr. Thomas S. Windmuller, SVP Member & Government Relations.

TravelDailyNews: What is the opinion of IATA regarding US-EU open skies?

Thomas Windmuller: IATA does favour liberalization. The Air Transport industry is an industry like any other industry. There has already been liberalization for 25 years (1979) in United States and for less time in Europe, where liberalisation started 10 years later in 1989. But liberalization has been incomplete so far. Ownership rules are outdated as they deny access to foreign carriers to the national markets. Governments have been reluctant to open up their domestic market because they wanted to protect national airlines. In addition, liberalization is incomplete because it has not proceeded with the same rate around the world. US-EU is a natural place to the liberalization because it consists of two relatively mature markets that have approximately the same size. Such liberalization between EU and US could provide a model, a template for other parts of the world, which could either join the agreement or replicate it in their own area.

TDN: When do you think this agreement will be reached?

TW: I am optimistic although these negotiations are a challenge for both sides. Political reactions will play an important role in the achievement of the agreement, given that this year there will be the elections for the European parliament and the presidential elections in United States.

TDN: What the effects of such an agreement will be?

TW: I don’t believe that the two parties can reach an agreement that will make a profound change in the industry. It will probably be an agreement modest in scope but it will be the first step for the future and towards the full liberalization of the area. The final agreement can be reached either in 2007 or 2009, as 2008 is the year of presidential elections in United States. The way benefits will be distributed depends on the government negotiations (US-EC).

TDN:Will this development contribute to the movement towards mergers and what will happen with airline alliances?

Such developments depend on the relaxation of ownership and control rules; I personally believe that there will be mergers, but airline alliances will continue to exist. There will be a painful transition period and; as a result, there will have few global players and niche players (low cost, etc). However, fewer airlines do not mean less competition. Airline alliances emerged exactly because airlines were not able to merge; alliances were the second best thing airlines could do within the existing regulatory framework, but the future air transport scene will have both mergers and airline alliances.

The market drive points towards consolidation as it has happened in other industries as telecommunications, automotive,pharmaceutical, etc. The consolidation cannot and will not prevent new entrances in the industry and that is a healthy situation.

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