Air Transport World

Focus on business

IATA's 54th Annual General Meeting talked more about the industry than about itself

MONTREAL-Formal business was less evident than ever at IATA's 54th AGM as the organization devoted considerable time to seminar-like presentations on operations issues and the business of running an airline.

Topics included Year 2000 compliance, safety and the development of electronic commerce. The most discussed in-house subject was the controversial reorganization of the increasingly inefficient and outdated industry settlement system as part of the effort to streamline operations.

The streamlining effort is a constant, ongoing process. Some steps are minor, such as elimination of the purely honorary title of IATA president. Now, a president is selected to preside over the ACM only. This year, Sir Harry Tirvengadum, head of Air Afrique, fulfilled the role.

Another result of the streamlining is yet another shuffling within the Secretariat. Functions have been moved, two new divisions--Information and Marketing Services, and Industry Monetary Services-were created and numerous tasks have been consolidated under Corporate Services.

The biggest-and most controversial--streamlining relates to creation of IATA Distribution Services to replace the unwieldy and costly bank settlement plan system (ATW, 6/98, p. 57). Consultant KPMG described its recommendations to the delegates but controversial though the matter may be, no public debate took place. The IATA Board of Governors already had decided to accept the recommendations.

While in consolidation mode, IATA also has begun including the settlement system in its accounts.

The cost-saving possibilities are huge. Though IATA had set an initial goal of saving 20% on costs, KPMG says savings of 42-51%, equal to $100 million annually, are more likely if the plan is fully implemented. …

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