IATA

The Founding of IATA

IATA (International Air Transport Association) was founded in Havana, Cuba, in April 1945. It is the prime vehicle for inter-airline cooperation in promoting safe, reliable, secure and economical air services - for the benefit of the world's consumers. The international scheduled air transport industry is now more than 100 times larger than it was in 1945. Few industries ...

can match the dynamism of that growth, which would have been much less spectacular without the standards, practices and procedures developed within IATA.

At its founding, IATA had 57 members from 31 nations, mostly in Europe and North America. Today it has some 240 members from 126 nations in every part of the globe.

The modern IATA is the successor to the International Air Traffic Association founded in the Hague in 1919 - the year of the world's first international scheduled services.

 Early Days

The old IATA was able to start small and grow gradually. It was also limited to a European dimension until 1939 when Pan American joined. The post-1945 IATA immediately had to handle worldwide responsibilities with a more systematic organization and a larger infrastructure.

This was reflected in the 1945 Articles of Association and a much more precise definition of IATA's aims than had existed before 1939.

To promote safe, regular and economical air transport for the benefit of the peoples of the world, to foster air commerce, and to study the problems connected therewith;
To provide means for collaboration among the air transport enterprises engaged directly or indirectly in international air transport service;
To cooperate with the newly created International Civil Aviation Organization (ICAO - the specialized United Nations agency for civil aviation) and other international organizations.

The most important tasks of IATA during its earliest days were technical, because safety and reliability are fundamental to airline operations. These require the highest standards in air navigation, airport infrastructure and flight operations. The IATA airlines provided vital input to the work of ICAO, as that organization drafted its Standards and commended Practices. By 1949, the drafting process was largely complete and reflected in "Annexes" to the Chicago convention, the treaty which still governs the conduct of international civil aviation.

In those early days, ICAO coordinated regional air navigation and support for airports and operational aids in countries which could not themselves afford such services. IATA provided airline input to ICAO and to sessions of the International Telecommunications Union on wavelength allocation.

The standardization of documentation and procedures for the smooth functioning of the world air transport network also required a sound legal basis. IATA helped to mesh international conventions, developed through ICAO, with US air transport law which had developed in isolation prior to World War Two. The Association made a vital input to the development of Conditions of Carriage the contract between the customer and the transporting airline. One early item on the legal agenda was revision and modernization of the Warsaw Convention - originally signed in 1929 - on airline liability for passenger injury or death and cargo damage or loss. This work continues.

Once they were operating within a sound technical and legal framework, airlines' next requirements were for answers to questions such as: who can fly where? What prices are to be charged? How is the money from multi-airline journeys - that is, interlining - to be divided up, and how do airlines settle their accounts?

The Chicago Conference of 1944 which gave birth to the Chicago Convention tried to achieve a multilateral answer to the first two questions, but failed to do so. The questions of who flies, and where, were resolved on a bilateral basis. The benchmark Bermuda Agreement of 1946 between the US and the UK was the first of almost 4,000 bilateral air transport agreements so far signed and registered with ICAO.

In the early days, governments insisted on the right to oversee the prices charged by international airlines but could not, in practical terms, develop those prices for themselves. IATA was delegated to hold Traffic Conferences for this purpose, with all fares and rates subject to final government approval. The aim was twofold: ensuring that fares and rates would not involve cut-throat competition, while ensuring that they could be set as low as possible, in the interests of consumers.

A coherent pattern of fares and rates pattern was established, avoiding inconsistencies between tariffs affecting neighboring countries - and thereby avoiding traffic diversion. The predictability of fares and rates in this pattern also enabled airlines to accept each others' tickets on multi-sector journeys and thus gave birth to interlining. Today, 50 million international air passengers a year pay for their ticket in one place, in one currency, but complete their journey using at least two, and sometimes five or more, airlines from different countries using different currencies.

The first worldwide Traffic Conference was held in Rio de Janeiro in 1947. It reached unanimous agreement on nearly 400 resolutions covering all aspects of air travel.

Fare construction rules for multi-sector trips, revenue allocation - pro-rating - rules, baggage allowances, ticket and air waybill design and agency appointment procedures were typical details agreed at this pioneering meeting.

Today, that pioneering work is reflected in the currently applicable IATA Resolutions dealing with these and many other subjects. Notable examples are:

The Multilateral Interline Traffic Agreements: These are the basis for the airlines' interline network. Close to 300 airlines have signed them, accepting each others' tickets and air waybills - and thus their passenger and cargo traffic - on a reciprocal basis.
Passenger and Cargo Services Conference Resolutions: These prescribe a variety of standard formats and technical specifications for tickets and air waybills.
Passenger and Cargo Agency Agreements & Sales Agency Rules: These govern the relationships between IATA Member airlines and their accredited agents with regard to passenger and cargo.

Debt Settlement between airlines, largely arising from interlining, takes place through the Clearing House, which began operations in January 1947. During its first year, 17 airlines cleared (US) $26 million. The IATA Clearing House today.

Growth and Development

 International air transport grew at double-digit rates from its earliest post-1945 days until the first oil crisis in 1973. Much of the impetus for this growth came from technical innovation. The introduction of turbo-propeller aircraft in the early 1950s, transatlantic jets in 1958, wide-bodied aircraft and high by-pass engines in 1970 and later, advanced avionics were the main innovations. They brought higher speeds, greater size, better unit cost control and, as a result, lower real fares and rates. Combined with increased real incomes and more leisure time, the effect was an explosion in demand for air travel.
Increased demand for air travel led to increased activity for IATA

Technical work evolved into seven broad areas. Avionics and Telecommunications included the vital air navigation function; Engineering and Environment developed IATA policy on aircraft noise and other emissions; Airports defined airline requirements for airport terminals; Flight Operations worked on safety factors such as minimum aircraft separation standards and air routings; Medical monitored health standards for flight crews and facilitated air travel for disabled passengers; Facilitation attempted to speed the flow of people and goods through airports - particularly, customs and immigration; Security worked on measures to safeguard passengers and cargo by preventing hijacking and sabotage and on minimizing fraud and theft of tickets.

IATA's legal efforts anticipated the effects of new technology associated with the period of rapid growth. It was able to advise the industry on new aircraft and systems, electronic data processing and advances in sales and marketing techniques. Since acts of hijacking and sabotage became more frequent during this period, IATA assisted in the development of the Tokyo, Hague and Montreal Conventions, the first international legal counter-measures.

Automation became commonplace in airline operations during the 1960s. Standardization in its use was less commonplace and IATA began its involvement in perfecting standard message formats for inter-company data exchange, which continues to this day.

The goal has been to save money for the airlines, while enhancing airline service. This philosophy was carried over to many activities during the 1950s and 1960s. Development of the Clearing House was followed by the establishment of Billing and Settlement Plans and Cargo Accounts Settlement Systems - in effect, one-way clearing houses to speed the flow of revenue from agents to airlines. Sales Agents were given the opportunity to prove their professional status under an accreditation process, and training - in conjunction with the Universal Federation of Travel Agents' Associations and the Federation of Freight Forwarders' Associations - was introduced. The pattern for airline-agent relations was set with the introduction of the Standard Agency Agreement in 1952. There are now nearly 81,000 IATA agents worldwide and 135,000 students have enrolled for IATA-sponsored agency training courses since they were introduced.

International air transport creates special problems of taxation. This was a concern even before World War Two. IATA makes specific challenges to the legality of certain taxes and points out to governments the counter-productive effect of excessive aviation taxation in general. User Charges - payment for using airports and air navigation services - mushroomed during the 1960s and 70s. IATA's task is to minimize their impact by ensuring that the charges are for facilities actually required, that charges are cost-related and that productivity improvements are built into cost projections. Currency earned by airlines abroad is sometimes blocked by the central bank of the country in which it is earned. IATA works to free it, for transfer back to the airline that earned it.

Unit Load Devices, or ULDs - principally, containers - allow rapid, economical cargo handling. IATA Members developed the technical specifications for containers and created a ULD control centre, to keep track of their movements. Until 1955, there was a complete embargo on the air transport of toxic, flammable or corrosive materials. Then IATA developed Dangerous Goods Regulations for their safe carriage. A decade later, Live Animals Regulations provided for suitable standards for the in-flight welfare of animals.

 

 A Two Tier IATA

Between the late 1940s and the early 1970s, it could be said that flight was transformed from "a scientific phenomenon to a public utility at the disposal of the entire world." At the same time, the popularization of civil aviation led to growing demands that the "public utility" view of the industry on the part of governments be modified to encompass greater competition and wider access to markets.

These demands were fuelled by competition for leisure travellers provided by charter companies and the challenge of stimulating demand to fill the new wide-bodied aircraft. Potential demand for air travel had extended well beyond the original client base of bureaucrats, businessmen and the well-to-do. New travel products and greatly increased price flexibility were needed. As a result, the old basis for conducting IATA Traffic Conferences needed modification.

At the same time the US Government, which had first given IATA Traffic Conferences immunity from national anti-trust law in 1946, began its own review of air transport regulation which, although domestic in scope, was bound to have international repercussions.

The international dimension of the US review resulted in a "Show Cause Order". Hearings took place in 1979, at which IATA was called upon to show cause why anti-trust immunity should not be removed from its Tariff Coordination activities. The outcome mainly affected North Atlantic passenger fares which, for some years, were subject to special rules under an inter-governmental Memorandum of Understanding (MoU) between the US and ECAC states. The present position is that all Tariff Coordination activities continue to be protected.

Eventually, IATA was re-organized on a two-tier basis in October 1979. The tiers comprised:

Trade Association (technical, legal, financial, traffic services and most agency matters)
Tariff Coordination (passenger fares, cargo rates, and related conditions and charges)

At present, some 100 Members, including the world's largest airlines, continue to participate in Tariff Coordination.

From a New Trade Association to a New Strategic Thrust

The IATA that emerged since 1979 has put an increasing share of its resources into trade association activities.

IATA also changed the basis of its funding. Much of the association's funding is now done through the marketing of its products and services to Member airlines, other airlines and others in the travel, transport and tourism industry. As a result airlines can access a broader array of professional services, tapping into IATA's expertise. And IATA has greater flexibility in the way it approaches its tasks, while remaining devoted to its non-for profit operations principles.

In many ways, those tasks remained the same as in 1945, or even in 1919. But IATA gave them new relevance and focus by redefining its mission and goals in 1994:

Safety & security: to promote safe, reliable and secure air services.
Industry recognition: to achieve recognition of the importance of air transport worldwide social and economic development.
Financial viability: to assist the industry to achieve adequate levels of profitability, by optimizing revenues (yield management) while minimizing costs (fuel, charges and taxation).
Products & services: provide high-quality, value for money, industry required products and services that assist the airlines in meeting the needs of the consumer.
Standards & procedures: to develop cost-effective, environmentally-friendly, standards to facilitate the operations of international air transport.
Industry support: to identify and articulate common industry positions and support the resolutions of key industry issues (congestion, infrastructure).

These objectives proved to be relevant and most were carried over to the new millennium, where they still form most of IATAs current mission.

Ensuring the Viability of Air Transport

While the 20th century saw the creation and rapid growth of the air transport industry, the beginning of the 21st century was marked by great challenges met with major transformations.

Over the last decade, the industry has been rocked by a series of successive crises and shocks. These include terrorism, pandemic threats, volcanic eruptions, global economic upheavals and an unprecedented rise in the cost price of fuel. Between 2000 and 2010, airlines posted a net loss of $30 billion.

All this has made IATA’s leadership more crucial than ever. In 2002, Giovanni Bisignani took over leadership of IATA as its Director General and CEO from Pierre Jean Jeanniot. Bisignani initiated a complete restructuring of the association to increase IATA’s relevance and speed in driving major industry changes.

 Initiatives spearheaded by IATA include:

The IATA Operational Safety Audit (IOSA): IOSA is the global standard for airline safety management and by 2009 airlines were required to achieve IOSA registration as a condition of IATA membership. This is the flagship component of a comprehensive strategy that includes audits, cargo, flight operations, infrastructure, training and data collection.
Environment: IATA led the alignment of the whole aviation industry—airlines, airports, manufacturers and air navigation service providers—in a long term strategy to achieve carbon-neutral growth by 2020 and to cut aviation’s carbon emissions by half by 2050.
Simplifying the Business (StB): In 2004 IATA launched this initiative to use technology to improve customer convenience and reduce costs. In 2008, 100% e-ticketing was achieved, marking a major milestone for the industry. Other industry savings initiatives range from bar-coded boarding passes (BCBP) to Fast Travel, Baggage Improvement Program (BIP) and e-freight, e-services.
Savings: IATA embarked on a major initiative to reduce costs across the air transport value chain, particularly with monopoly suppliers. By 2010 this ongoing campaign has claimed industry savings exceeding $17 billion.
Financial: IATA operates industry financial systems which now settle in excess of $300 billion a year with a success rate of over 99.99%. Unit costs for this system have been decreased by over 80% since 2000.

IATA also strengthened its position as the voice of the industry, with firm advocacy and lobbying to focus governments on the long term issues for viability of aviation, such as liberalization, environment and taxation.

On 1 July 2011, Tony Tyler succeeded Giovanni Bisignani as IATA’s Director General and CEO.