DOHA: On New Year’s Day, 1914, Abe Pheil squeezed into the open cockpit of a Benoist Type XIV boatplane in St. Petersburg, Florida, and became the world’s first airline passenger, flying 20 miles in 23 minutes for a specially auctioned fare of US$400.
Last year three billion people followed in his footsteps.
But while the first century of paid flight has transformed the passenger experience from a bone-shaking wooden biplane to frills such as flat beds, for many investors it provides the same risk of getting wet as the original hop across Tampa Bay.
Global airlines made US$13 billion last year, but a centennial gathering in Doha this week will hear that margins remain thin, and the industry has rarely if ever covered its cost of capital since the original St. Petersburg-Tampa Airboat Line.
At the heart of the problem is a debate about whether a unique system of ownership controls and bilateral agreements, which make it hard for airlines to combine, should be relaxed.
“We as an industry wish that we were treated like any other industry and were able to buy and sell across borders, and merge and do business like any other business,” said Tony Tyler, director general of the International Air Transport Association (IATA), whose more than 200 members are meeting in Doha until June 3.
“After 100 years, we haven’t found a way of doing that and governments haven’t found a way of letting us do it – not yet,” he told Reuters ahead of IATA’s annual meeting, where a replica of the first boatplane has been given pride of place.
About 3,000 people gathered to watch the original plane make the first scheduled flight, which took place a long way from the storm clouds of conflict gathering in Europe.
But experts say the background to today’s ownership debate lies in decisions taken after the last century’s wars, when airspace was deemed sovereign partly due to fears of militarization.
The alternative, treating the sky like the high seas, was rejected.
Those fears have retreated but the bureaucratic landscape remains, with the industry ruled by bilateral traffic rights limiting market access, and backed up by ownership restrictions that help to preserve more than 1,000 airlines.
Despite extensive deregulation and consolidation in the US and Europe, airline leaders say ownership barriers are hampering efforts to cope with high fixed costs. — Reuters