Every year is an election year somewhere, but in 1996 hundreds of millions of voters will be going to the polls in the USA, India, Russia, Spain, Australia, and possibly Germany and the UK. The consequences for airlines are unpredictable, but there certainly will be plenty.
Take the USA, where every four years the political establishment is crippled by a presidential election. As November approaches, less and less can be achieved. If there is a change in president, months of obfuscation follow as transition teams are appointed, new political appointees are put through the wringer of congressional confirmation, and everybody gets to know their new job. Some posts are never filled - the Clinton administration has failed to appoint the senior Department of Transportation career official in the three years since the last election.
Since the US airline industry is deregulated, the identity of the president should have less direct effect than in other countries which have national carriers and direct regulation. However, politics still play a big part in the airline business. Bilateral relationships, foreign ownership rules, merger controls and taxation all depend on the administration, to say nothing of the impact on economic confidence which can affect the business sector.
Consider the recent winter of discontent in Washington, where the federal government was shut down first by the budget impasse and then by the weather. Wry observers noted that life carried on despite the lack of government, but the budget fiasco left airlines in the dark about the tax on passenger tickets, cargo waybills and jet fuel.
It's a much more fundamental matter in Russia, where the airlines remain highly vulnerable to political change. The board of Aeroflot, which remains by far the most important carrier, is appointed by government and indeed has recently been changed. The plethora of smaller Russian carriers all need political patronage, such as traffic rights, to survive. And the Russian economy is much more vulnerable to political whims than any in the west.
Then there's India. Here, the deregulation process has been beset by political interference and contradictory signals - even with only one government to worry about. On-again, off-again 'policies' covering everything from the foreign investment rules to restrictions on jet aircraft imports do nothing to build long-term confidence among investors. Within government owned Air-India and Indian Airlines, politically motivated management shakeups - or the threat of them - result in a cloud of uncertainty.
Australia's forthcoming election could have major aviation implications. If the opposition Liberal party wins, it is likely to complete trans-Tasman open skies. As well as giving Qantas, Ansett, Air New Zealand and any startups freedom of operation in this market, such a move would also allow Air New Zealand to increase its newly acquired 25 per cent stake in Ansett to 50 per cent - or more. On the other hand, a Labour victory could lead to no open skies and a limit on the Ansett shareholding.
Spain's election will also have its effect. The socialist administration is likely to be replaced, and traditionally this means a new guard at flag carrier Iberia. This comes at a tricky time, as Iberia has just received European Commission approval for its latest restructuring plan and capital injection.
No business can afford to have its management team thrown out by the dictates of election cycles. The most successful businesses change their teams when they need to be changed, but otherwise leave them to do their job. Continuity is essential. Equally, businesses cannot prosper in an environment where strategic decisions are hobbled by politics.
This is not an argument with the principle of democracy. A change in government is bound to result in new policies - that's why electors throw out existing governments in the first place. But businesses need to know where they stand. Politicians can help by putting in place clear, unambiguous, well thought out laws and regulations, and doing so for the greater good rather than to serve some doubtful ideal. Then, they have to ensure that their laws work so well that the next government won't repeal them. Uncertainty helps nobody.
Source: Airline Business
