Stephen Alterman has been shepherding the Air Freight Association through the trials and tribulations of U.S. aviation and cargo deregulation since 1982.

The association claims as members more than a dozen companies representing the cream of the U.S. air freight industry, including Burlington Air Express, United Parcel Service and Federal Express.Mr. Alterman accepted his position as head of the association after serving in a private law practice in Washington. Before that, he spent seven years at the now-defunct Civil Aeronautics Board, whose legal division he headed.

Mr. Alterman discussed the Air Freight Association's agenda and his predictions for the global air freight industry with Journal of Commerce transportation reporter Lisa Burgess in Washington.

Q:What are the three major issues the Air Freight Association is dealing with?

A:Federal Aviation Administration reform, environmental regulation and airport-airline relations.

Q: What is your view of FAA reform?

A:Something must be done. It is clear that while we have a very good federal aviation system - probably the best in the world - there are things that don't work in it, and those things need to be fixed. And with the new Congress, this is the time to try to fix them.

Q:What would you like to see done to the FAA, specifically?

A:No. 1, the FAA should be an integrated body. You should not split the air traffic control function from the safety function. It could lead to absurd results. We also think the FAA is too bureaucratized and too politicized, and that it should be independent of the Transportation Department.

Having said that, we think Congress should concentrate on three areas of FAA reform: personnel, procurement and financial reform, to ensure the monies are there to run the system.

Q:What about environmental regulations?

A:There are two basic types of regulations we are dealing with now: emissions and noise.

Noise has been with us seemingly forever. Frankly, I wish I could tell those people who want quiet skies that we will get to the stage where there will be no noise, but airplanes make noise. They will always make noise.

The challenge is to balance the desires of those living near the airports with those requirements of the business. We are spending billions of dollars in our industry to convert our fleets to Stage III technology, and having spent that, we need to ensure that we can operate our current fleet for its economic life.

Q:Can you contrast the differences between where the industry stands in terms of domestic environmental regulations, compared with international regulations?

A:Domestically, we're doing a good job. We'll have our fleets to Stage III by 2000. International is more of a threat, because the International Civil Aviation Organization is debating both noise and emissions stringency right now, with proposals that would, as a practical matter, significantly impact our current fleet. Between now and the end of the year, when ICAO will vote on whether or not to expand its current environmental recommendations, we face a major challenge to figure out what to do with the ICAO noise and emissions standards.

Q:How concerned are you about possible changes in the ICAO standards?

A:It is not a theoretical problem of a bunch of policy wonks trying to figure out what the rules should be. This is a bottom-line issue. If we cannot operate our fleets because of too-stringent environmental rules, we cannot afford to operate our businesses.

Q:What about airport and airline relations - always a rocky topic?

A:This is a subject that is frustrating. I don't think I'd be going out on a limb to say that if our industry did not have airports to land at, we'd be in a lot of trouble. The other side of the coin is that if the airports didn't have our planes landing at them, they would quickly be out of business. So it's always seemed to me that airports and airlines are in the same business, and should be natural allies. Unfortunately, that hasn't happened. The communities have drifted apart and are often engaged in nasty battles. I don't think we talk to each other enough. But we are a lot further down that road today than we were two years ago.


A:If you sit down with some of these airports, you discover that they really would like to help you. They need money, and generally, we are the ones who get it for them, through our landing and other airport fees. One thing that's been suggested is that airports need to have cargo committees that focus specifically on cargo issues, in addition to the general committees that focus on all airline operational issues and that are dominated by, and will always be dominated by, passenger carriers. I think that's a very good idea.

Q:As the United States continues to negotiate liberalized air agreements, what do see the future of the air cargo industry looking like?

A:The issue of open skies and expanding international markets is one of the most important issues the industry faces today. If you look at what happened after domestic deregulation in the late 1970s, you saw double-digit growth every year. The air cargo industry is now a mature industry domestically.

Internationally, everybody estimates between now and 2002 that the growth of air cargo will be 6.5 percent to 7 percent annually. I think that may be conservative, because if, in fact, we can get more liberalized international agreements, and do to international transportation something like what we did to domestic, the potential for air cargo growth could be double-digit.

Q:I have heard from U.S. bilateral negotiators that cargo is an easy sell, when it comes to placing various elements on the bargaining table. Is that true?

A:Yes, but the DOT negotiators refuse to take the next step, which is to separate cargo agreements from passenger agreements and enter into them today, so we can all take advantage of the benefits. Instead, they wait to negotiate the contentious passenger issues before entering into cargo agreements.

We have been held hostage time after time to passenger agreements, when we could have entered into cargo agreements months and maybe years before the overall agreement. We don't appreciate being used as the bargaining chip for increased passenger rights. We think the United States government has the obligation to negotiate cargo the same way it negotiates passengers, and do it separately.