In recent years there has been a steady erosion of the anti-competitive regulatory environment which was established in international aviation after the war. This briefing document outlines the history of IATA in fixing international air fares and the advantages claimed to be derived from it.
The benefits claimed from IATA fare fixing are questionable. A number of alternatives to IATA such as zones of competition in air fares, licensing of non-IATA airlines, the deregulation of airline ticket retailing, charter airlines, and discounting are examined. These markets account for approximately thirty million air passenger per year in the United Kingdom.
The costs of IATA price fixing include the loss of regulatory authority and influence from governments to airlines, reduced airline efficiency due to price collusion, inefficient air[airports, neglect of the consumer interest, losses of tourist revenues, and increased costs to the traded goods sectors.
The Civil Aviation Authority should require that airlines submit their tariffs independently of the deliberations of IATA on fares. In this way the regulatory authority should establish a programme of promoting price competition between airlines.