SINGAPORE—The International Air Transport Association (IATA) has urged governments around the world to intervene less in the airline business, specifically by giving airlines a free hand in restructuring their labor forces to save precious cash.
Speaking during IATA’s 67th general assembly in this city-state, IATA director general and CEO Giovanni Bisignani said that governments must change their fundamental approach to airline regulation by adopting a more hands-off policy.
“Governments must change their approach,” he said. “We need policy decisions that replace intervention with commercial freedom, reduce barriers to exit and allow airlines to restructure like normal businesses.”
The IATA chief’s call immediately found widespread support among the group’s member airlines, including Philippine Airlines, which has locked horns with its unions in trying to restructure its labor structure.
PAL president Jaime Bautista pointed out that, given a free hand to implement its proposed restructuring program, the flag carrier would save anywhere from $10 million to $15 million a year in operating costs.
“These are savings that could be used to further improve the airline, to make it more competitive internationally, and ultimately redound to the benefit of the riding public in terms of cheaper airfare and better all-around service,” he said in an interview on the sidelines of the annual IATA convention.
Bautista stressed the point of the IATA chief that governments should treat airlines the way they treat other companies that are forced to face challenging market conditions.
“We should be allowed to restructure the inefficient parts of our business just like any other firm,” he said, adding that management makes sure that employees who are affected by any restructuring effort are amply compensated.
In the case of the airline’s inflight catering unit, for example, Bautista noted that the company was saddled with about 600 personnel when having only 400 staffers would already be enough to meet the airline’s full requirements.
The PAL chief expressed hopes that future disagreements with the airline’s labor union will be handled through the “proper channels,” specifically the Department of Labor and Employment and the Court of Appeals, instead of the most recent issue where the unions approached Malacañang—unsuccessfully—for regulatory intervention.