ACCC welcomes IATA request for phased removal of immunity

The Australian Competition and Consumer Commission has welcomed an International Air Transport Association proposal for the phased removal of the current immunity covering most of IATA's activities.

"The ACCC has been reviewing a 1985 indefinite authorisation* granted to IATA for all of its activities, apart from its travel agency program which was reviewed in 2002", ACCC Chairman, Mr Graeme Samuel, said.

IATA recently asked the ACCC to provide a replacement authorisation which would progressively expire over the next two years. IATA stated in making the request that elements of its conduct did not raise significant issues in competition law in Australia and could be undertaken without authorisation either in their current form or after modification.

IATA sought a longer sunset period for its passenger and cargo tariff coordination systems, until 30 June 2008, to allow it time to devise and implement a new interline system and if necessary seek its authorisation.

In the draft determination today, the ACCC has recognised significant transition benefits in allowing IATA time to assess and adjust its conduct before immunity lapses.

"IATA has high industry coverage and the involvement of its members in jointly determining many arrangements in the aviation industry, in particular the setting of IATA interline fares and rates, naturally raise competition concerns.

"The granting of this authorisation will provide IATA with an opportunity to address those concerns and reduce its reliance on authorisations".

The ACCC's draft determination is available from the ACCC website.

*The Trade Practices Act 1974 prohibits competitors from agreeing to work together in a way that reduces competition. Authorisation provides immunity from court action arising from such agreements but can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any public detriment.

Background

IATA is a non-governmental international trade association of most carriers operating scheduled international air services in the transport of passenger, mail and cargo. IATA members accounted for 95 per cent of passengers and 97 per cent of cargo carried to and from Australia by air in 2004.

The activities covered by the ACCC's draft determination comprise:

• the IATA Cargo Agency System
• the IATA Scheduling System
• the IATA Prorate System
• the IATA Passenger Services System
• the IATA Cargo Services System
• the IATA Clearing House System
• the IATA Passenger Tariff System, and
• the IATA Cargo Tariff System.