AIRLINE VIEWS ON THE PROPOSED GATS TOURISM ANNEX Richard Smithies Director, Policy Analysis Government & Industry Affairs - IATA SYMPOSIUM ON TOURISM SERVICES WTO/OMC Geneva, February 2001

2 AIR TRANSPORT & GATS TODAY Annex on Air Transport Services excludes traffic rights and all services directly related to their operation but covers CRS, Marketing & Selling, Maintenance & Repair of aircraft CTS to review developments & coverage every 5 years Bilateral system of Agreements basis for exclusion States can control liberalisation process maintain principles of reciprocity and fair and equal opportunity to compete offer procedures for handling disputes

3 INDUSTRY VIEWS ON THE GATS GATS is not the vehicle for fundamental reform ICAO is best-qualified international agency to take account of AT particular characteristics Handle air transport on a sectoral basis Review offers opportunity to clarify scope and coverage of services directly related to the operation of air traffic rights Belief that a hybrid system can de developed permit multilateral & bilateral arrangements to co-exist depending on regional preferences and needs

4 BASIS FOR THE TOURISM ANNEX Tourism & Travel Related Services(Cat. 9) covers hotels & catering travel agencies & tour operator services tourist guide services other services Tourism Satellite Account system adds air, sea, rail & road passenger transport certain financial services navigational aids tourism information services

5 WHY INCLUDE AIR TRANSPORT IN A TOURISM ANNEX? WTO-Tourism & UNCTAD meetings neither body has direct responsibility for air transport only sources for this argument Arguments include: need to focus on tourism sector as a whole anti-competitive practices in network services developing countries at the mercy of abuses of a dominant position

6 WHAT ARE THE CONSEQUENCES? Air transport in a Tourism Annex Would destroy Air Transport Annex take out 2 of 3 services covered Split GATS coverage of air transport passenger and freight remove common services Marketing & Selling only service covered Need to re-examine GATS legal framework

7 AIRLINE INDUSTRY CHANGES Consequences of liberalisation more competition airline restructuring Changes include: development of hubs, alliances & commercial arrangements revenue management systems evolving distribution systems growing reliance on e-commerce Changes are limited by: airport & airspace congestion environmental considerations foreign ownership restrictions

8 LIBERALISATION & COMPETITION LAW Competition authorities under liberalisation they assume a more important role airlines comply with relevant competition laws Antitrust immunity / exemptions needed for airlines to agree on standards & interline fares to maintain a coherent multilateral framework Global network of services taken for granted ensures service to every country

9 DISPUTE SETTLEMENT GATS Air Transport Annex GATS dispute settlement procedures can only be invoked where commitments have been made when multilateral & bilateral mechanism have been exhausted Bilateral air service agreements contain articles relating to: anti-competitive practices dispute resolution CRS practices - two considerations: existing regulations or codes of conduct some commitments for CRS exist under the GATS

10 CONCLUSIONS A Tourism Annex is an important undertaking include all interested parties in the drafting process If the proposed Tourism Annex is put in place, it should not include any part of air transport IATA supports the review of the GATS Air Transport Annex conducted by the Council for Trade in Services in informed & transparent manner