ANALYSTS, FORWARDERS SKEPTICAL ON IATA RATE HIKE

ANALYSTS, FORWARDERS SKEPTICAL ON IATA RATE HIKE

The International Air Transport Association finally filed its proposed cargo rate increase plan with the U.S. Department of Transportation late last week, but analysts and freight forwarders are dubious about the carriers' ability to make it stick even if the DOT approves the rate hike.

"I'm quite skeptical as to whether or not they'll be able to make it stick," said Brian Clancy, a cargo analyst for MergeGlobal Ltd. in Arlington, Va."If you talk among U.S. carriers, there's no unity there. That's going to be a problem," said Peter George, vice president of international air freight at Danzas Corp., an international air freight forwarder based in Bellevue, Wash.

Mr. George said Danzas would have no problem supporting the increase if the carriers were united, but added, "We're not going to jeopardize our position in the market as a result of people not being uniform."

The plan, agreed to by carriers in August, would raise rates 15 cents a kilogram, or 7 cents a pound, on most international shipments. It follows an earlier, unsuccessful plan that was scuttled on procedural grounds by the European Community. The earlier plan called for a surcharge of 15 cents a kilo, whereas this one seeks a rate increase.

The papers filed with the DOT last week said the increase was intended to take effect Oct. 1. But IATA officials acknowledged there is no way they will be able to get it approved that quickly.

"Optimistically, it will take six weeks," one IATA official said.

The resolution calling for the rate increase was dated Aug. 27, but IATA, a Geneva-based body representing more than 200 airlines, was unable to file it sooner because U.S. carriers first had to supply documents providing economic justification for the hike.

That justification would appear to be fairly evident - the massive losses suffered by airlines around the world over the past few years. But approval is no sure thing, given the arcane workings of IATA and the DOT.

And the dog-eat-dog competition between the carriers ensures that they will not hesitate to undercut each other as long as overcapacity remains the dominant feature of most international routes.