Tuesday October 17, 2006

ACCC Review of IATA Exemptions
to Trade Practices Act

Dear {Firstname},

You may have read about the recent IATA Geneva change of policy in writing to the ACCC advising that they wished to withdraw their request to have 'authorisations' (immunities) from certain provisions of the Australian Trade Practices Act (TPA) renewed.  Instead they have proposed dates by which the current authorisations would lapse.

The effect of this will mean that activities such as the Cargo Agency Program including the 'CASS' Billing & Payment System would operate without immunity. IATA Geneva believe that most of the program could operate within trade practice law and any uncertain areas could be fixed by the date of these 'sunset clauses'. However these assumptions are at risk and in an Australian context the program may not be able to operate without immunity and CASS could be a victim. In the case of the Cargo Agency Program, the sunset clause is May 2007.

This decision was made, as far as we are aware, without consultation with IATA in Australia or any of its member Airlines operating here. Neither was any other relevant industry body advised prior to the IATA notification to the ACCC. It would appear to have been an entirely 'global' decision by IATA based on experience of introducing revised programs in Europe, where they are now operating without immunity. IATA now wish to explore this opportunity in Australia.

However there are conditions in the Australian TPA including 'exclusionary provisions' and 'per se' breaches that do not always exist in other jurisdictions and for this reason IATA member Airlines in Australia have raised genuine concerns about operating without immunity in the future.

AFIF has been very active on these issues and its recommendations in regard to the ACCC review of IATA may have not always been perceived by certain sections of the industry to be the perfect solution, however AFIF is first and foremost in existence to look after the best interests of its members and this it has always done.

As you may be aware, AFIF had written to the ACCC during the protracted IATA review process, expressing a need for the previous Australian Cargo Agency Program to be modernised to bring it into line with current practice and to mirror certain provisions of the program now operating in Europe. Important changes related to the "monies in trust" provision and also the formation of a new Cargo Executive Council for Australia giving Forwarders and Airlines equal voting rights. The development of the new Cargo Agency Program for Australia, implemented in 2006, was an outcome which benefited AFIF members.

AFIF then confirmed to the ACCC support for the new program which includes the CASS system. AFIF also supported the 'interline' agreements, which had been the subject of a separate review.

AFIF and the CBFCA now agree that the planned expiration of certain immunities could have a detrimental effect on the way airfreight business with IATA member Airlines is conducted in the future, as these Airlines might run the risk of legal action if part of a system that has no immunity from the TPA. CASS is one such component that could be at risk and AFIF believe that CASS brings good order to the industry.

If this situation were to transpire it could hardly be considered in the best interest of the consumer as Airlines may be forced to make separate arrangements with individual Forwarders, creating inequity and increasing inefficiencies and costs in the process.

As a result AFIF, the CBFCA and CAPEC representatives requested a 'Pre-determination Conference' (PDC) with the ACCC, which will take place on October 19, where we plan to voice our concerns and support the retention of certain immunities for, particularly, the CASS billing and payment system. Our case is built on the basis that the public benefit outweighs any anti-competitive detriment created by the system. It should be borne in mind that no matter what submissions or support is put forward by industry, be it AFIF, CBFCA, IATA or whoever, the ACCC may still decide not to grant immunity.

We hope the matter can be concluded successfully for the mutual benefit of the whole airfreight community and we will keep you informed accordingly.

Should you require any further information please contact AFIF in the usual way.

Kind regards,

Suite 403, Level 3
152 Bunnerong Road
Eastgardens
NSW 2036
Tel: (61 2) 9314 3055
Fax: (61 2) 9314 3116