[Congressional Record Volume 142, Number 44 (Wednesday, March 27, 1996)]
[Senate]
[Pages S3006-S3009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                UNITED STATES/FRANCE AVIATION RELATIONS

  Mr. PRESSLER. Mr. President, I rise today to discuss the important 
issue of United States aviation relations with the Government of 
France. Although the immediate crisis concerning the upcoming schedule 
for the summer season apparently has been resolved, I remain very 
concerned about the state of U.S./French aviation relations.
  As a result of France's decision in 1992 to renounce the bilateral 
aviation agreement that existed between our two countries, France 
currently is our only major aviation trading partner with whom we do 
not have an air service agreement. In the absence of such an agreement, 
U.S. and French carriers continue to fly between our two countries, but 
they do so solely at the pleasure of each government and without the 
necessary flexibility to increase or change service when market demand 
warrants. Essentially, U.S./French air service is frozen as if the 
clock stopped in 1992.
  In a speech before the International Aviation Club of Washington last 
month, I spoke at some length about the fires of air service 
liberalization burning brightly on the European continent. In hailing 
the enormously important U.S./German open skies agreement signed 
several weeks ago, I noted that nearly 40 percent of U.S. travel to 
Europe will now go to or connect through open skies markets. I ask 
unanimous consent that the text of the speech to which I referred be 
printed in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. PRESSLER. Although this wave of air service liberalization 
touches France on three of its borders, France stands seemingly 
oblivious to the competitive air service forces besieging it. The fact 
of the matter is while its European neighbors are reaching out to 
embrace the future of global aviation with the enlightened view that 
the economic benefits of an open skies relationship with the United 
States are a two-way street, France continues to cling to the past. 
This choice is not without significant adverse consequences for 
France's economy.
  So what precisely is France's air service policy with respect to the 
United States? It appears that policy can be best described as 
``managed stagnation.'' In an attempt to rebalance the market share of 
state-owned Air France vis-a-vis the highly competitive U.S. carriers, 
France has made the unfortunate decision to forego the tremendous air 
service growth other European countries are experiencing in their air 
service relationships with the United States. Ironically, some of the 
lucrative new air service opportunities European countries now enjoy 
are the direct result of traffic that France's restrictive air service 
policy has driven away to other countries.
  According to a recent statement by Anne-Marie Idrac, the French State 
Secretary for Transport, France ``is not any worse off'' for its 
decision to renounce the U.S./French air service agreement. Economic 
analysis, however, paints a far different--and quite sobering--picture. 
In fact, this analysis shows France's policy of managed stagnation is a 
recipe with a very bad aftertaste for the French economy. Let me 
explain.
  First, the adverse economic consequences of France's air service 
policy is best illustrated by a comparison with the recent experiences 
of the Netherlands. In 1991, both the U.S./French and U.S./Dutch air 
service markets experienced tremendous growth. Scheduled passenger 
traffic grew 21 percent and 14 percent respectively. In 1992, however, 
aviation relations with France and the Netherlands turned abruptly in 
opposite directions. Around

[[Page S3007]]

the same time France renounced the U.S./French bilateral aviation 
agreement, the Netherlands opted to enter into an open skies agreement 
with the United States.
  What has resulted from these decisions? The U.S./Netherlands 
passenger market has grown at a rate over 10 times faster than the 
U.S./French market. Between 1992 and 1994, scheduled passenger service 
between the United States and the Netherlands grew 38 percent. In stark 
contrast, France's decision to renounce the U.S. air service agreement 
caused passenger growth in the U.S./French market to abruptly halt. 
Scheduled passenger traffic in the U.S./French market grew a measly 3 
percent during that period, compared to 21 percent in 1991 the year 
immediately prior to renunciation.
  The net effect of these vastly different policies also is illustrated 
dramatically by the aggregate size of both country's passenger market 
with the United States. In 1991, the U.S./French passenger market was 
100 percent larger than the U.S./Dutch market. By 1994, it was just 60 
percent larger. What a difference two air service policies with the 
United States can make!
  Importantly, this trend of France foregoing tremendous air service 
opportunities is reflected elsewhere in Europe as well. For instance, 
between 1992 and 1994 scheduled passenger traffic between the United 
States and Switzerland grew 30 percent--ten times faster than it did in 
the French market. Amazingly, this tremendous growth does not reflect 
the U.S./Switzerland open skies accord signed last year. As was the 
case in the Netherlands, the U.S./Switzerland open skies agreement will 
likely cause that rate of growth to accelerate. The more mature U.S./
British air service market also experienced strong growth--10 percent--
during this same period.
  Unquestionably, France has succeeded at stagnating the U.S./French 
passenger service market at a time when new transatlantic air service 
opportunities for European countries with the United States abound.
  Second, at a time when revenue from connecting passenger traffic is 
increasingly important, France's air service policy is drying up U.S. 
connecting traffic at Paris' two key international gateway airports, 
Paris-Charles de Gaulle and Orly. Between 1992 and 1994, connecting 
traffic carried on U.S. airlines fell 55 percent at the Paris airports. 
Let me repeat this astonishing fact. Connecting traffic carried on U.S. 
airlines fell 55 percent at the Paris airports between 1992 and 1994.
  Where did this connecting traffic go? One need look no further than 
competing airports on the European continent. During the same period, 
U.S. airline connecting traffic grew 24 percent at Frankfurt and an 
astounding 329 percent at Amsterdam's Schipol Airport! The recent U.S./
German open skies agreement, as well as open skies agreements the 
United States signed last year with neighboring countries including 
Belgium and Switzerland, will surely cause the rate of ongoing 
connecting passenger traffic diversion away from Paris airports to 
accelerate. In particular, I fully expect German airports will press 
France hard in this competition for connecting passenger traffic.
  Third, Air France, the intended beneficiary of France's decision to 
renounce the U.S./French air service agreement, has on-balance suffered 
as a result of France's policy of managed stagnation.
  It is true that state-owned Air France has increased its share of the 
U.S./French market from 29 percent in 1992 to 37 percent in late 1995. 
However, this rebalancing of market share, which in large part resulted 
from U.S. carriers routing connecting passengers to international 
gateway airports in other continental European countries, has come at 
an inordinately high price.
  As a direct result of France's decision to tear up its air service 
agreement with the United States, Air France is isolated as the only 
major European carrier that does not have an alliance with a U.S. 
carrier. Quite correctly in my view, our Department of Transportation 
has indicated it will not approve any code-sharing alliance between Air 
France and a U.S. carrier until France agrees to enter into a 
sufficiently liberal air service agreement with the United States.
  What is the practical consequence for Air France? Every major 
European carrier has access to feed traffic from the very lucrative 
U.S. domestic market except Air France. To make matters worse for Air 
France, if the United Airlines and Delta Air Lines alliances with 
European carriers are granted antitrust immunity, in combination with 
the Northwest/KLM alliance, nearly 50 percent of passenger traffic 
between the United States and Europe will be carried on fully 
integrated alliances. Without a doubt, France's air service policy with 
the United States has placed Air France at a severe competitive 
disadvantage in the transatlantic and connecting service markets.
  A recent paper by the Commission of the European Communities on U.S./
E.C. aviation relations made this point well. According to the E.C., 
``the commercial advantages of strategic alliances are such that it 
will be difficult for a major European carrier with the ambition to 
become (or remain) a global player, not to enter into an alliance with 
a U.S. partner.'' The E.C. is absolutely correct. France's decision to 
continue to forgo an air service agreement with the United States is 
threatening Air France's long-term future as a global player.
  Mr. President, France's aviation policy with the United States is not 
only inconsistent with the trend of air service liberalization sweeping 
Europe, it also is badly out of step with France's own domestic air 
service policy. Earlier this year, France opened its skies to domestic 
competition thereby ending the virtual monopoly of Air Inter, the 
domestic wing of Air France. This forward looking domestic policy came 
about because France realized it needed to better position Air Inter to 
compete next year in the deregulated intra-European air service market.
  Unfortunately, France has failed to apply this same vision to its air 
service policy with the United States. In marked contrast, France 
continues to cling to the past and it uses government restrictions to 
protect Air France from competition in the increasingly liberalized 
transatlantic market.
  The huge economic costs the French economy is bearing as a direct 
result of France's misguided air service policy with the United States 
reminds me of an editorial I read earlier this year shortly after 
Thailand abandoned its economically disastrous experiment with 
renunciation of its air service agreement with the United States. That 
January 26, 1996, editorial from the Bangkok Post astutely called 
Thailand's decision to renew formal aviation relations with the United 
States ``a victory for common sense.''
  Let me add Thailand's decision was also a victory for forward looking 
economic policy. In condemning the economic folly of Thailand's failed 
experiment, the Bangkok Post added ``every airline that comes here or 
increases its frequency is investing more in the country, providing 
more jobs, bringing more tourists. Restricting those operations 
necessarily has the reverse effect.'' I ask unanimous consent that the 
text of the editorial from the Bangkok Post to which I have referred be 
printed in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 2.)
  Mr. PRESSLER. Mr. President, let me conclude by saying I hope France 
will recognize its air service policy with the United States is an 
economic failure that is exacting a very high cost in terms of lost 
jobs and other commercial opportunities. To remedy this situation, I 
hope France will renew its formal aviation relations with the United 
States by agreeing to a liberal air service agreement. As the 
Commission of the European Communities recent study on EC/US aviation 
relations recently warned, countries such as France with a restrictive 
air service policy place themselves at great economic risk as the wave 
of air service liberalization continues to sweep across Europe.

                               Exhibit 1

 Remarks of Senator Larry Pressler, Before the International Aviation 
               Club of Washington, DC, February 14, 1996

       Bruce, thank you for your kind introduction. I am pleased 
     to join the long list of outstanding speakers who have been 
     privileged to share their views on international aviation 
     policy with this distinguished group.
       Let me also thank the distinguished individuals who 
     graciously accepted invitations to join me at the head table 
     today. My friend

[[Page S3008]]

     Ambassador Chrobog and I met through our mutual love of 
     opera. We also share a belief that the economic benefits of 
     liberalized trade between nations is a two-way street. Mr. 
     Ambassador, I am pleased that our two nations are on the 
     brink of signing an open skies agreement of truly historic 
     magnitude. Such an agreement will be momentous for both 
     nations and will be a catalyst for fully liberalizing the 
     enormous U.S./E.U. air service market. In pursuing this 
     initiative, I believe Germany is providing outstanding 
     leadership for all of its European Union partners.
       Carol and Charlie, I am also pleased you are able to be 
     here today. Carol and I share a common challenge. We each are 
     trying to make U.S. air carriers realize that good things can 
     happen to them when they work together as an industry. Robust 
     competition and long-term economic vision need not be 
     mutually exclusive. In fact, I would argue they can, and 
     indeed should, go hand-in-hand. Charlie, as you will 
     unfortunately experience firsthand, much work remains to be 
     done in this regard.
       For Valentines Day I had considered making sugar-coated 
     remarks extolling the numerous benefits of a U.S./German open 
     skies agreement. I decided, however, to save that speech for 
     another day. The bitter sweet reality of U.S. international 
     aviation policy is that every step taken--even major leaps 
     forward such as a possible U.S./Germany open skies 
     agreement--is met by parochial infighting among our carriers. 
     Regrettably, I fully expect efforts to finalize the U.S./
     German open skies agreement will not escape this plague.
       Let me say that I firmly believe pernicious infighting 
     among our carriers is the single greatest barrier to the 
     United States' efforts to open and expand global air service 
     markets for U.S. carriers. It is a sad story which is played 
     out time and time again.
       As leaders in the aviation community, I come to you today 
     with a challenge. I challenge you to broaden your vision of 
     the significance of new international air service 
     opportunities for our carriers. To me, these opportunities 
     conjure up images of tremendous trade benefits which buoy the 
     U.S. economy. I see significant economic benefits derived by 
     our airline industry and aircraft manufacturers. I think of 
     consumers benefiting by enhanced choice and competitive 
     prices. I also see new jobs for American workers and new 
     commercial opportunities for our States and communities.
       I urge you to have the vision to look beyond which carrier 
     has positioned itself to benefit most from new international 
     air service opportunities. Simply put, I challenge you to 
     make your focus the American flag on the tail of airplanes 
     providing new service opportunities, not the name on the side 
     of the plane.
       With that challenge in mind, let me now turn to my specific 
     remarks. Today I want to focus on exciting developments and 
     old challenges in Europe. Of course, I speak of Germany and 
     the United Kingdom respectively. However, since your last 
     three speakers discussed U.S./Japan aviation relations--a 
     subject in which I have a very keen interest--I cannot resist 
     making a few points.
       First, I am deeply troubled the Government of Japan 
     continues to refuse to respect the beyond rights of our so-
     called 1952 carriers. Those rights are guaranteed by the 
     U.S./Japan air service agreement. International agreements 
     between countries are sacred trusts and nothing short of full 
     compliance is acceptable.
       Second, I am also very concerned about the Kyoto Forum 
     which the Japanese organized recently. By excluding the 
     United States and other Western country members of APEC, I 
     believe the Government of Japan acted contrary to the spirit 
     and intent of the Bogor Declaration.
       Third, the Government of Japan's appeal for the United 
     States to ``equalize'' aviation opportunities between our 
     countries is misdirected. Market forces, not the U.S./Japan 
     air service agreement, has tilted transpacific market share 
     advantage in favor of U.S. carriers.
       As I have said in the Senate numerous times, the disparity 
     in transpacific market share is due to the fact that Japanese 
     carriers--which labor under heavy government regulation--
     cannot compete with our more efficient carriers whose 
     operating costs are substantially lower than their Japanese 
     counterparts. If equality of transpacific market share is 
     what the Government of Japan seeks, it should look no further 
     than to itself to take steps which will enable Japanese 
     carriers to compete more effectively with U.S. carriers. It 
     is critical we not forget that just 10 years ago, under the 
     very same bilateral agreement that the Government of Japan 
     now criticizes, Japanese carriers had a larger market share 
     on transpacific routes than U.S. competitors.
       Fourth, complaints by the Government of Japan regarding the 
     limited Fifth Freedom opportunities of our carriers must be 
     put in proper context by considering the enormous offsetting 
     Sixth Freedom opportunities Japanese carriers are exploiting 
     between the Asia-Pacific market and the United States. Viewed 
     from this perspective, Japan's criticism is without merit. In 
     fact, I regard it as somewhat remarkable when one considers 
     it comes from a major trading partner with whom the United 
     States has a trade deficit of more than $65 billion!
       Finally, in a floor speech on October 27th, I called on our 
     so-called MOU carriers to come forward with economic analysis 
     supporting their position that the cornerstone of our 
     negotiating strategy with Japan should be to trade away the 
     beyond rights of our 1952 carriers. Having seen no such 
     study, today I renew my call for the MOU carriers to make 
     their case with numbers, not rhetoric. I find it a bit odd 
     that MOU carriers who criticize DOT for not doing adequate 
     prenegotiation economic analysis are now pushing DOT to rush 
     into passenger talks, even though these carriers have yet to 
     provide economic analysis which supports their position.
       Turning to Europe, let me first say that if the identity of 
     the author of Primary Colors is the best kept secret in 
     Washington, my support for an open skies agreement with 
     Germany is one of the worst. I am delighted Secretary Pena 
     and German Transport Minister Wissmann have agreed on the 
     framework for an open skies agreement between our countries. 
     I am also pleased a formal round of talks will be held in 
     Washington next week to iron out textual details. I 
     enthusiastically support swift completion of a formal U.S./
     German open skies agreement.
       How is it that a U.S./German open skies agreement is within 
     reach? Secretary Pena had the vision to recognize that 
     competition is always the best ally to open restrictive 
     markets. He built on the vision that President Bush and the 
     Dutch government both showed when the United States and the 
     Netherlands signed an open skies agreement in 1992. At that 
     time, it was a very bold move, one for which Jeff Shane, who 
     is here today, should be commended.
       Jeff created a model on the European continent by which all 
     neighboring countries could see firsthand the tremendous 
     economic benefits that are produced by a liberalized aviation 
     relationship with the United States. Last year, Secretary 
     Pena built on that foundation with the nine European country 
     open skies initiative. Then, he reached out to our excellent 
     friend and great trading partner, Germany.
       The timing could not have been better. Minister Wissmann--
     himself a man of great vision--recognized the time was right 
     to secure for the German economy and German consumers the 
     great benefits that unquestionably would result from an open 
     skies agreement with the United States. As I said earlier, in 
     pursuing this initiative, Germany has provided outstanding 
     leadership for its partners in the European Union.
       Before I discuss why I believe this tide of liberalization 
     will reach the shores of the United Kingdom, let me address 
     an issue that has come to my attention recently regarding the 
     framework of the U.S./German open skies agreement.
       I understand a question has been raised about the timing of 
     when the U.S./German open skies agreement would take full 
     force relative to a final decision on an application for 
     antitrust immunity which is expected to be filed by the 
     United Airlines/Lufthansa alliance. I do not consider this to 
     be a problem. I have total confidence in Secretary Pena's 
     ability to fully and fairly discharge his statutory duty in 
     considering that application when it is filed, regardless of 
     when the agreement goes into effect. I feel compelled to add 
     I am somewhat mystified that some of our carriers continue to 
     sell Secretary Pena so short, at the same time they reap the 
     benefits from his excellent leadership in international 
     aviation policy.
       Last week in London, Malcolm Rifkind, the U.K. Secretary of 
     State for Foreign and Commonwealth Affairs, gave a very 
     important speech in which he advocated nothing less than 
     transatlantic free trade. He called for ``political will and 
     vision'' to bring this goal about. Pledging that ``Britain 
     will be a champion of greater economic liberalization across 
     the Atlantic,'' Minister Rifkind noted the United Kingdom has 
     been leading the way and said Britain would continue to do 
     so.
       The United Kingdom deserves great credit as a shining 
     beacon for liberalizing trade in the U.S./E.U. market 
     generally. However, its policy in the area of transatlantic 
     air services is far out of step with the principles of free 
     trade.
       Let me share two truly remarkable facts which dramatically 
     make my point. Last year, British Airways had a larger share 
     of the U.S./U.K. passenger market than all U.S. carriers 
     combined! Also, data shows that in terms of U.S./U.K. market 
     share, two of the top three carriers are British airlines! 
     Without question, market forces are not controlling the 
     distribution of air service opportunities between the United 
     States and Britain.
       How will competitive forces unleashed by a U.S./German open 
     skies agreement pressure Britain to reassess its outdated 
     aviation policy which tarnishes an otherwise very impressive 
     record on liberalizing transatlantic trade? The answer lies 
     at two levels: heightened competition by continental European 
     airports for connecting passenger traffic and enhanced 
     competition by U.S. carrier alliances against British 
     airlines.
       London always will be a popular destination for passengers 
     originating in the United States. That is not to say, 
     however, that in this era of global networks, connecting 
     passengers will continue to feel a compelling need to use 
     Heathrow rather than airports such as Amsterdam's Schipol, 
     Frankfurt or the new one planned at Berlin-Brandenburg. 
     Connecting passengers look for convenient schedules and 
     competitive fares. Due to the lack of European gateway 
     opportunities, Heathrow once was the connecting airport of 
     necessity, not choice, for passengers originating in the 
     United States. Times have changed.

[[Page S3009]]

       Liberalization of air service markets on the European 
     continent have created new connecting service options. 
     Evidence already clearly shows connecting traffic is being 
     diverted away from London. Statistics dramatically illustrate 
     this point. Between 1992 and 1994, connecting traffic carried 
     on U.S. airlines grew just 3 percent at Heathrow. During the 
     same period, U.S. connecting traffic grew 24 percent at 
     Frankfurt and an astounding 329 percent at Schipol! An open 
     skies agreement with Germany will greatly accelerate the rate 
     of this connecting passenger diversion.
       These statistics are very interesting but should they 
     matter to a British policymaker? Absolutely. This trend 
     should raise serious concerns considering that last year 
     alone connecting traffic accounted for more than 1 billion 
     pounds of export earnings for the United Kingdom.
       A U.S./German open skies agreement will also make U.S. 
     alliances with European carriers even more formidable 
     competitors in the U.S./Europe air service market. This will 
     not be a welcome development for British carriers. If the 
     United and Delta alliances are granted antitrust immunity, in 
     combination with the Northwest alliance, nearly 50 percent of 
     passenger traffic between the United States and Europe will 
     be carried on fully integrated alliances.
       Will this pose a competitive challenge for British 
     carriers? Investors in British Airways sure thought so. 
     According to a Financial Times article last week, despite a 
     quarterly pre-tax profit of 30 percent, British Airways 
     shares fell on the news of the ``preliminary `open skies' 
     deal struck between Germany and the U.S.'' British Airways' 
     public attack on antitrust immunity last month at an ABA 
     conference also is very telling on this point. Privately, 
     British Airways has made no secret they very much covet 
     antitrust immunity for their alliance with USAir.
       So where do we go from here? I think U.S./U.K. negotiations 
     should resume, but not on the terms of the October offer 
     which was highly conditioned and essentially allowed the 
     British to pick which U.S. carriers competed against British 
     carriers in what markets. Instead, I encourage the British to 
     come to the table with a ``bigger, bolder and braver'' 
     approach like Sir Colin Marshall, Chairman of British 
     Airways, called for last November.
       First, to help clear the way for more ambitious 
     negotiations, I am announcing today that I plan to introduce 
     legislation to increase to 49 percent the level of 
     permissible foreign investment in U.S. airlines. I am already 
     working with the Administration to determine a formulation to 
     maximize the benefits of this tool. One thing is certain, the 
     limited, highly conditioned October offer would not trigger 
     the benefits of the bill I intend to introduce.
       Second, I am also calling today for U.S. carriers to stop 
     being ``pennywise and pound foolish'' with respect to Fly 
     America traffic. As a taxpayer, I want the U.S. government to 
     pay the most competitive price for government travel. As a 
     policymaker, I find nothing in the legislative history of the 
     Fly America statute even suggesting Congress intended to 
     guarantee U.S. carriers a monopoly profit for government 
     travel. I see no good reason the opportunity for British 
     carriers to competitively bid through their U.S. carrier 
     partners for Fly America traffic should not be on the table 
     if British negotiators pursue a ``bigger, bolder and braver'' 
     approach.
       Third, as far as Heathrow access is concerned, I call on 
     the British to muster up the ``political will and vision'' 
     Minister Rifkind spoke of to change the runway operations at 
     Heathrow. On this side of the Atlantic, we are constantly 
     told by the British Ministry of Transport that additional 
     Heathrow access is impossible because there are no additional 
     take-off and landing slots. What the British fail to tell us 
     is a number of U.K. airport capacity studies, including one 
     issued as recently as August 1994, have concluded the British 
     could potentially create an additional 100 daily takeoff 
     slots and an additional 100 daily departure slots at Heathrow 
     if they switched its runways to more efficient mixed-mode 
     operations.
       I am keenly aware this is a sensitive political issue for 
     the British government. Not long after I suggested this last 
     July in London, I received a letter from the Heathrow Noise 
     Coalition politely telling me to mind my own business. One 
     thing is clear, however, the British do not have a monopoly 
     on political problems relating to Heathrow. I need not tell 
     this audience that Heathrow access is a hot button political 
     issue in the United States and, quite frankly, an issue that 
     is straining relations between our two countries.
       Let me close by saying an open skies agreement with Germany 
     unquestionably would be the product of vision by both 
     countries. I hope the same long-term economic vision will 
     prevail in our aviation relations with the Japanese and the 
     British. Again, thank you for the opportunity to join you 
     today.

                               Exhibit 2

              [From the Bangkok Post, Fri, Jan. 26, 1996]

           U.S.-Thai Aviation Deal a Victory for Common Sense

       After five years of going eyeball to eyeball, the US and 
     Thailand finally concluded an aviation agreement last January 
     19. Who blinked first? By all indications, Thailand. It had 
     to, the policy of getting US airlines to reduce their 
     frequencies between Northeast Asia and Thailand was working 
     so brilliantly that it had to be scrapped and reversed. After 
     all, Delta had pulled out of Thailand, both Northwest and 
     United Airlines had reduced their frequencies. Lest anyone 
     forget, that was the original intention for scrapping the 
     agreement in November 1990. When the impact of that hit the 
     tourism industry between the eyes, the backlash was 
     instantaneous. In barely four rounds of informal and formal 
     talks, an agreement materialized where about seven previous 
     rounds had all failed.
       There are many reasons for this agreement, and the speed at 
     which it was pursued. But most important among them is that 
     it risked becoming a serious political liability for 
     Thailand's aviation negotiators who were running out of 
     reasons for maintaining their hardline stand. The blast from 
     the Association of Thai Travel Agents and its independent 
     study on the aviation industry was one facet of the mounting 
     pressure. Then there was all this talk of open-skies and 
     aviation liberalization being pursued under the ASEAN and 
     APEC umbrellas.
       Thailand was being increasingly isolated as the US patched 
     up its aviation differences, one by one, with other Asian and 
     European countries. On the cargo front, the US-Filipino 
     aviation agreement had opened a window of opportunity for 
     Federal Express to develop Subic Bay as a regional cargo hub, 
     a move that would leave Thailand's own Global Transpak 
     project wallowing in the water. The American Society of 
     Travel Agents annual convention is to be held in Bangkok in 
     November, bringing 10,000 agents who would wonder how they 
     are supposed to promote tourism to Thailand when the tourists 
     can't fly here.
       Moreover, the void was preventing the full consummation of 
     the United Airlines-Thai International alliance. Both of 
     Thailand's key aviation negotiators, the director-general of 
     the aviation department and the permanent secretary of the 
     ministry of communications, sit on THAI's board. By 
     continuing to stall on the agreement, they were effectively 
     hampering the progress of THAI. And soon coming to town as 
     keynote speaker of the PATA conference in April is Garry 
     Greenwald, the chairman of United Airlines who, lest anyone 
     forget, recently tongue-lashed Japan's restrictive aviation 
     policy and who would have no doubt have delivered a similar 
     riposte at Thailand's had an agreement not been reached by 
     then.
       There was simply no way that Thailand could have won this 
     battle. But neither is this agreement a victory for the 
     United States. It is a victory for public pressure and the 
     power of the Thai tourism, industry, especially groupings 
     like the Association of Thai Travel Agents and people like 
     Anant Sirisant who had the gumption to stand up and be 
     counted, at considerable risk to himself and his own company, 
     the East-West Group. While many other operators serve on 
     committees and use their positions for personal 
     aggrandizement, Mr. Anant stuck his neck out, and won.
       Several months ago, this newspaper, too, called Thai 
     aviation policy, ``a national outrage.'' Suddenly, things 
     began moving.
       It has been said before, and it needs to be said again, 
     global aviation is administered by archaic and backward 50-
     year-old rules that governments are having extreme difficult 
     dismantling. There is no logical explanation for the 
     structure any more; it's just the way it's done, especially 
     in the absence of an alternative. Every country has to take 
     its own course of action. In Thailand's case, every airline 
     that comes here or increases its frequency is investing more 
     in the country, providing more jobs, bringing more tourists. 
     Restricting those operations necessarily has the reverse 
     effect.
       Foreign airlines serving Bangkok now need to forge stronger 
     relationships with Thai hotels and tour operators, work with 
     them, and use their political and economic strength to get 
     what they want. This approach must, under no circumstances, 
     be adversarial or aggressive, but always rational and 
     constructive. If THAI is in the dumps, and likely to remain 
     there for at least a few years as it seeks to regain its 
     erstwhile prestige, there is no reason why other airlines 
     should be hampered from raising their frequencies and 
     bringing more tourists to spend their money in Thailand.
       The U.S.-Thai deal is a clear victory for the concept of 
     conducting the aviation business in an open and competitive 
     manner. Because no matter what happens, it should always be 
     the public that should benefit.

                          ____________________