Plane to see? Empirical Analysis of the 1999-2006 Air Cargo Cartel

”Cargo tariffs are agreed through the IATA machinery, and in theory approved by governments….the IATA Tarff Coordination Conferences still agree cargo tariffs on over 200,000 separate routes. But these tariffs bear little relevance to what is actually charged in the marketplace ” (Doganis, 2002). ”The stipulations ICAO standards contain never supersede the primacy of national regulatory requirements. It is always the local, national regulations which are enforced in, and by, sovereign states, and which must be legally adhered to by air operators making use of applicable airspace and airports. ICAO is therefore not an international aviation regulator, just as INTERPOL is not an international police force. We cannot arbitrarily...............condemn airlines for poor safety performance or customer service……. should a country transgress a given international standard adopted through our organization, ICAO’s function in such circumstances…….is to help countries conduct any discussions, condemnations, sanctions, etc., they may wish to pursue, consistent with the Chicago Convention and the Articles and Annexes it contains under international law.”(ICAO, 2021). In spite of being a growing liberalized global industry served by many firms, we know that much of the international air cargo sector operated as an admitted cartel from 1999 through 2006. Given its visibility and importance to world trade, how did this cartel go undetected for so long? It seems that partly due to the way the cartel was uncovered, almost no empirical analysis has been done about the case. To fill this gap, we use publicly available air carrier data and examine whether a diligent anti-trust authority could have identified cartel/collusive behavior in the air cargo industry using established empirical methods. Our stark findings point to a regulatory failure in an industry whose long-standing business practices through the era of airline liberalization effectively “slipped through the cracks”, leaving the many shippers of air cargo unprotected against collusive behavior.