The International Air Transport Association (IATA)

The roots of IATA go back to 1919, the year that saw the world’s first scheduled air transport ser­vice, when six “air transport” companies formed the organization known as the International Air Traffic Association. Membership comprised solely European carriers until Pan American joined in 1939. The present organization was founded in Havana, Cuba, in 1945, and was originally composed of 57 airlines mostly operat­ing in Europe and North America. The purposes of the new organization were to promote safe and

economical international air transport, to provide a means for collaboration of airline companies, and to cooperate with the newly formed Inter­national Civil Aviation Organization (ICAO) as the representative of member airlines. As liaison to ICAO, through its members IATA supplied technical input for the Standards and Recom­mended Practices (SARPs) found in the Annexes to the Chicago Convention. IATA contributed to documentation and procedures standardiza­tion that has allowed countries with differing languages and cultures to commercially interact with little difficulty. It also assisted in structuring a sound legal basis for international commercial transactions, meshing treaty law with existing air transport law of the United States. Ongoing work involves revision and modernization of the legal, basis of carriage of persons and cargo in interna­tional aviation, as liability provisions of the War­saw Convention have given way to subsequent amendments and superseding agreements.

After World War II, IATA began develop­ing tariffs containing fares and rates (Traffic Coordination) for international carriage of pas­sengers and cargo at meetings called Traffic Conferences, subject to the approval of the gov­ernments involved. A consistent schedule of rates and fares was also established, allowing airlines to accept each other’s tickets on multisector itin­eraries, which in turn led to interlining between the world’s airlines. It had been argued for years that IATA was, through its Traffic Coordination practices, engaged in price fixing that would normally be in violation of antitrust laws and in derogation of competition. Yet the United States, and other countries having similar laws, routinely granted antitrust exemptions for the activity. The truth was that international air transportation was among the least competitive industries in the world.

With the “father of deregulation,” Alfred Kahn, at the helm of the CAB when deregulation was enacted in 1978, the deregulators turned their attention to international aviation. In 1979, hearings were conducted by the CAB in the United States

to ascertain whether antitrust immunity should be removed from the Traffic Coordination activities of IATA. The world’s airlines lined up in uniform opposition. The hearings concentrated on the North Atlantic routes, which were served by 40 airlines. The Justice Department supported the CAB, but the Department of Transportation urged a “go slow” position. Nevertheless, on May 5, 1981, the CAB issued a “show cause” order that raised the issue of whether antitrust immunity should be removed from IATA Tariff Coordinating Conferences. No decision was reached by the CAB prior to its demise at the end of 1984 pursuant to the “sunset” provisions of the Airline Deregulation Act. The Department of Transportation, having inherited the antitrust responsibilities of the CAB beginning in 1985, terminated the proceeding that year.

IATA, taking its cue, then reorganized itself into two parts, a Trade Association and a volun­tary Traffic Conference, the latter dealing with the controversial issues of fare setting. In this way, IATA members sought to avoid further antitrust scrutiny of the United States antitrust regulators. No further proceedings have been ini­tiated by the United States on this issue. IATA is still an influential trade association.

The organization has also served since the early days as the clearinghouse for interline accounting, and today services the accounts for 240 airlines in over 115 countries. Multilateral Interline Traffic Agreements have been signed by most of the international carriers, which facili­tates the seamless flow of passengers and cargo throughout the world.