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.