The Carter administration's campaign to convince other nations to expand competition in international air services has encountered turbulence in mid-flight.
While there have been some successes -- several important countries have agreed to liberal bilateral agreements -- most of the world has reacted with emotions ranging from extreme caution to bitter opposition.
Pervasive resentment that the United States is trying to impose an economic philosophy favoring comtition on a generally skeptical and unwilling world community was clear here as high-level representatives of two dozen-plus nations and 50 airlines gathered for three days to discuss the U.S. policy at an international aviation symposium sponsored by the State Department, and organized by Onyx Corp., a consulting firm.
Many conference participants from abroad worried that the "unproved" U.S. policy could lead to the disintegration, or at least fragmentation, of a worldwide aviation network that allows a per -- son -- or cargo or mail -- to traverse the globe with relative ease using uniform tickets accepted by all airlines which have reasonably similar safety and technical standards whatever the country's language, customs or political makeup.
"One country should not impose its laws or aspirations on the rest of the world," Clayton Glenn, vice president of Air Canada, cautioned at one of the sessions. "Let's not take unilateral action and destroy everything built up in the last 40 years."
The arguments were reminiscent of the fear that airlines expressed during the domestic debate that took place before the passage last fall of the Airline Deregulation Act of 1978. Then, small communities feared a loss of service in a deregulated environment. Now, small and less-developed nations fear a cut-off if the large international airlines decide under the pressures of increased competition to seek profits elsewhere. Then, there was fear that deregulation would endanger an integrated domestic network. Here, there is fear that deregulation will disrupt a world system, and lead to increased protectionism, greater government involvement in aviation matters and general harm to the communications among nations that accessibility facilitates.
The world is not the United States, conference participants said repeatedly. "To put it bluntly, the international aviation system does not operate in a world of theory or ideals, but in a world of diversity and pragmatism -- a world of underdeveloped and developing nations, of socialism, communism, capitalism and various hybrids of the three," Knut Hammarskjold, director general of the International Air Transport Association, said. "Above all, it is a world in which the principles of national sovereighty rule."
Although U.S. representatives voice optimism about upcoming negotiations, some officials privately concede that the depth of opposition and nervousness among its trading partners may mean that 1979 turns out to be a year of consolidation, a year when others watch the results of both the U.S. domestic deregulation "experiment," as foreigners often referred to it, and of increased competition internationally, especially on the heavily traveled North Atlantic, that will come about this year as a result of agreements signed last year with Belgium, the Netherlands, West Germany and others. Many here urged the industry to take time to see what happens.
"We airline people are practical people; we must make some money for our shareholders," Armin Baltensweiler, president of Swissair, contended. "We must look at hard facts. I think 1979 financial results over the North Atlantic will provide us with food for thought," he said.
Participants from around the world seemed generally unconvinced by addresses by Civil Aeronautics Board member Elizabeth Bailey and University of Maryland professor Mahlon R. Straszheim suggesting that the benefits accruing from competition in domestic aviation may have relevance in international aviation. "The only thing that's proved is that you can introduce low fares and they can lead to profits -- at least in the short run," Frederik Sorensen, transportation minister for the European Economic Community, said in an interview after the conference. "That doesn't tell you yet whether it's a better system."
Sorensen worried -- as did others -- that the U.S. had a "very narrow consumer" attitude that would benefit "the individual who needs cheap fares to visit relatives" but that the range of services now available to business travelers and shippers could be cut back. "If a restricted number of services being offered is the result, the net effect for society might not be as great as the current system," he said.
Although Americans long have listened to the complaints of U.S. flag carriers that they are subject to restrictions and unfair competitive practices around the world and are forced to compete for business with government-subsidized airlines, it was clear from the conference that those other carriers, for their part, fear the inordinate power and efficiency they think the American carriers possess.
"Most flags are not able to match the United States carriers in productivity, efficiency or costs," said Antoine Veil, general manager of UTA, the privately owned French airline that operates between Europe and many developing countries.
He complained that Europeans were concered about the U.S. policy because it appeared to be inconsistent and contradictory with "a policy of closed protectionism which has historically characterized the U.S. economy," citing protective U.S. policies in shipping, textiles and components as examples. "So there is a suspicion that the United States pursues a policy where there is weakness," he said, adding that the U.S. had used "European disunity" to force its deregulation policies on all.
The freedom to compete that the U.S. says it wants for its airlines and others is "the freedom of the wolf in the stable," Veil said. He expressed the fearthat governments would take over airlines if deficits rise as a result of lowered fares in an increasing competitive environment, a step that would prove fatal to enterprise and independent companies, especially in developing countries.
Representatives of developing countries with fledgling airlines echoed his fears and argued for some protection from a fully competitive environment. "We from the less-developed countries feel that our civil aviation needs at least 10 to 20 years in some cases to achieve the levels of technology, professional skills and, most important, the economies of scale which will enable us to survive," Eliud W. Mathu, chairman of Kenya Airways, said at one session.
Greater competition may force the national airlines of some LDCs to the wall, adversely affecting their employment, transfer of technology, economic development and foreign exchange earnings, Mathu argued. Even the U.S. ensured a high degree of protection for its airlines until they were self-sustaining, he noted pointedly.
Mathu's sentiments were echoed by C.O. Yrausquin, head of ALM Antillean Airlines, who complained that he already has to withdraw air services in his home, the Netherland Antilles, because of increased competition, especially from American Airlines, which recently won route authority there from the CAB, leaving the economic development of tourism in his country dependent on U.S. airlines. Although the Antilles government did not oppose the new award, Yrausquin complained that his small national carrier, with little market identification, outmoded equipment and a lack of feeder traffic, could not compete with an American. But he worried that American could easily withdraw services from the Antilles at some point, like other carriers have in the past. "We cannot rely on other carriers; they can always pull out," he said.
Several participants complained of the inconsistency of the U.S. position because, despite the pro-competitive philosophy it is attempting to sell the world, the U.S. has a "Fly America" law requiring government-paid trips to be taken on U.S. flag carriers.
"Government protection is a fact of life in the international aviation world," Donald Farmer, director of the CAB's Bureau of International Aviation, conceded to them. "The Fly America legislation is inconsistent with a fully competitive policy, and the CAB would like to see it eliminated."
Farmer and other top U.S. aviation officials, including Deputy Assistant Secretary of State For Transportation Affairs James R. Atwood and CAB Chairman Marvin S. Cohen, continually tried to assuage fears that the U.S. could impose its will on the rest of the world. "The U.S. policy doesn't threaten anyone's sovereignty," Farmer told them. "We're not trying to bludgeon anyone." Noting that the U.S. had signed some agreements last year that can not be characterized as liberal and terribly pro-competitive, he said that "both roads" are open and the U.S. simply hopes to persuade as many as possible to go along on the one it feels will yield "better economic results."
In assessing the conference afterwards, Farmer said the foreigners were right in suggesting that the U.S. should not be telling them how to run their businesses. "But in another respect, we're only trading benefits with willing partners," he said.
"We will be firm if they happen to violate whatever agreement we have with them, but we are not threatening to cut off their landing rights if they don't go along with us."
He said it also became clear that "we may tend to underestimate the degree to which foreigners think our views are influential."
Because of what many said were uncharacteristically candid and frank discussions for a multilateral conference, American officials became acutely aware of the misunderstandings and mistaken nuances that creep into discussions of an international nature. "When we said, 'Here are our policies, and let's talk about them,' they thought it was a dictatorial act," Farmer said after the meeting. "When we say, 'Here's what we'd like to do,' they think we're saying, 'This is what we're going to do."
A speech CAB Chairman Cohen described as "conciliatory" in which he expressed hope for turning the "current ideological debate into a productive colloquy," for instance, was called "uncompromising" by Sorensen and others afterwards.
Although criticism of U.S. policies was prevalent here, there was support as well from those whose countries that have signed liberal bilateral pacts
"We are a small country surrounded by large ones, so we had to compete," said Belgium's W. Vanderperren, director general of its Civil Aviation Administration, in an interview at the conference. Belgium signed an agreement with the U.S. last year that fits the Carter policy objectives. "We are used to competing. But it surprised me to see how they are frightened.
"It is funny that aviation, with its advanced technology, is very conservative. It's conservative world afraid of change," he said. "It was good for America to propose change."
Support also came from some unexpected sources such as Air Chief Marshall P.C. Lal of Air India. Lal suggested that Air India was all for deregulation because it sees no immediate danger to its operation from the policy and has the opportunity to add some more flights.
At the closing session, State's Atwood labeled the meeting a success and conceded there was a "sales meeting" aspect to it, as had been alleged by H.A. Wassenbergh of KLM Royal Dutch Airlines, who suggested that someone should be issuing a guarantee and be "liable for possible damages to national interest" if "the product freedom" fails to live up to the pitch.
"We've tried to sell a few ideas, but we've also tried to buy a few ideas," Atwood said. Participants expressed some optimism after the conference when they recalled his final words: "I'm authorized by my government to say that we will admit that it is not clear that we're right if you will admit that it is not clear you're right."