TRADE: Developing Countries Fighting Fate in the Air

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Oct 5 1998 (IPS) - Fate may have placed the developing world close to earthly calamity and far from paradise, but if the region’s plans for access to air transport prosper, destiny may well be out-manoeuvred, at least on this front.

For the developing South has persuaded a United Nations (UN) entity to look into world air transport services from a Southern viewpoint.

Many countries in the South, especially island or land-locked nations, see air transport as their life-raft out of marginal existence and into tourism development, said experts meeting in Geneva last week.

Air transport liberalisation (the “open skies” approach) figures high on the World Trade Organisation (WTO) services sector list up for negotiation in the year 2000.

The developing countries must “debate the issues to be negotiated, in order to determine their position,” said Federico Cuello, technical undersecretary of the Dominican Republic’s Presidential Office.

Otherwise, “we will get to the negotiations in 2000 taking the stance of resisting everything because we don’t understand what its about,” he explained.

In the Uruguay Round of multilateral trade negotiations, from 1986 to 1994, “we were really not prepared, and very few countries followed these adequately,” said Cuello.

Now, the United Nations Conference on Trade and Development (UNCTAD) will concern itself with clarifying the issues of air transport services in order to define the negotiating position of the developing nations for in the year 2000.

“The UNCTAD role is fundamental in making sure the developing nations get to the decision-making stage better informed,” said Cuello.

The “open skies” air transport policy will more easily benefit the developing than industrialised countries, due to its repercussions on tourism, said Francios Vellas, professor at Toulouse University, France.

The nations of the industrial North have some reservations about the total deregulation of air transport “because their large internal markets must be protected,” explained Vellas.

And disagreements arise between the countries of the North too, because the open skies agreements proposed by the United States are not fully acceptable to the European Union, said Vellas speaking before UNCTAD.

The weighting of the US air companies, with fleets of 500 or 600 vessels, outnumber the European airlines, where only exceptional groups have 100 aeroplanes and even the biggest do not reach 300.

And the developing countries do abysmally poorly in comparison with these figures, as the fleets of their air companies only rarely have more than ten units.

A meeting of tourism experts held by UNCTAD in June examined the two main modes which would serve the South: regular and charter flights, the latter preferred by excursion operators.

The experts concluded the developing countries are in a vulnerable situation as regular flights are subject to bilateral agreements for routing rights.

This assignation of routes does not necessarily agree with the needs for frequency, quality and quantity of seats in the tourist sector. There is a contradiction between the countries’ air transport and tourism policies, said Cuello.

In some developing nations, the air transport policies are incoherent, because occasionally in order to maximise tax income some airlines are allowed total control over certain routes.

Meanwhile, the need for higher flight frequencies, more seats and competition on quality would have made more concessions advisable on some routes – especially those between big cities.

In the Dominican Republic, the Santo Domingo-Miami route is practically monopolised by American Airlines, a US company, said Cuello.

On the other hand, the charter flights “are exploited by the tourism operators with high levels of benefits for them, really leaving very little for the developing countries,” he lamented.

In any case, charter flights play a definitive role in the development of tourism in the Southern countries. For instance In the case of the Dominican Republic, 80 percent of tourists fly in.

Charter flights will put us on the world tourism map, recognised the Caribbean official.

During the UNCTAD meeting where the commerical air transport study was requested from a group of experts, the European representatives presented formal objections in an attempt to delay a final decision.

Delegates from the developing countries said this attitude was due to the Europeans recently liberalising their regional air transport, meaning they would like to observe the adaptation process to the new regime before facing multilateral negotiations.

The Europeans are also worried about the consequences of possible deregulation in the charter flights sector “where they are traditionally very strong,” stressed Cuello.

If the WTO were to rule for total freedom of competition in international air transport, tourists would see the cost of air tickets fall dramatically, as they would no longer be subject to bilateral agreements nor rigid assignation systems.

Air tariffs absorb the lion’s share of all tourism packages. Doreen Owuwu-Fianko, executive director of the Ghana Tourism Office, said all suppliers of tourism services, including the airlines, must contribute to reducing the cost of the product.

As a result of the UNCTAD organised debate “we will have conceptual clarity” on all the consequences the developing world would face from multilateral negotiation of the air transport issue in the WTO, concluded Cuello.