The recent article by Alfred E. Kahn entitled "Protecting Airlines From Freedom" (op-ed, Nov. 5) caused dismay to many of us who have been involved in international aviation matters.
The key point that Kahn ignores is that the prohibition he advocates against U.S. carriers' joining the International Air Transport Association actually creates more government regulation by substituting bilateral agreements between nations for the present business forum.
The international system of civil air transport requires governments to agree upon methods for settling disputes. The forum for government regulation is the International Civil Aviation Organization. However, 90 percent of the rest of the world's nations have agreed to use government monitoring of their regulated monopolies through IATA as the appropriate means of maintaining a self-sustaining world system.
The use of bilateral agreements to export U.S. antitrust laws has been a disaster for the United States air transport industry. I refer not only to the longtime U.S. international air carriers, which lost over $152 million last year in the international trade, but also to the new entrants, such as Delta, which also suffered enormous losses.
The theory espoused by Kahn does not work. The great majority of the international community (especially the newer and developing nations) do not accept the United States antitrust laws and have no hesitancy in subsidizing their national carriers for a variety of sovereign interests, such as promoting local tourism, strengthening hard currency reserves, employing local citizens, etc. In the maritime industry, the export of our antitrust laws through indictment of foreign carriers has resulted in harsh retaliatory actions a number of countries against U.S. Justice Department activities.
The United States has a number of competitive international carriers, and thus does not have the same incentive as other nations do to protect national carriers in international negotiations. A simple example of this is the Japanese negotiations that Kahn once stated would be completed quickly. Now, years later, the major new United States airline entrant still has not been granted landing rights in Japan.
The horror stories of discrimination against U.S. airlines in everything from landing rights to inability to use national reservation systems are too well-known to be repeated, and the United States government has not been able to correct these problems through bilateral negotiations.
The enormous changes in airline technology and airport capacity within the United States have allowed our government to grant liberal entry into interior gateways within the United States. In exchange for these rights, the best we have been able to obtain in bilateral negotiations is entry for two or more United States carriers into the other (usually much smaller) nation. This result was predicted by everyone who knows the airline industry. The foreign flag carriers have now achieved over 50 percent of the international business (the other nations make a concerted effort to have their nationals fly on their airlines) and the U.S. international carriers, whether "old" or "new" entrants, have divided the remainder of the business. When this is coupled with another feature of the "liberal bilaterals" requiring U.S. airlines to bid for lower fares to obtain U.S. rights, the result is that more and more carriers are dividing a smaller and smaller revenue base.
International aviation involves a mix of foreign policy considerations, a cumbersome governmental negotiating system involving 90 nations and regulated monopolies in over 90 percent of the world. In this setting, for the United States to attempt to export its antitrust policy through the Civil Aeronautics Board's prohibition on U.S. carrier participation in IATA is to pursue theory at the expense of reality.