is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:

One interesting aspect in this globalized world we have today is that the airline industry has, for some reason, been taken for granted. Perhaps to blame for it is its previous successes, whereby its very ubiquity have made people think nothing of its state and future, whether it be globally or even locally.

However, the airline industry is not exactly flying high these days (and, yes, I couldn’t resist the puns for this article, mea maxima culpa). Qantas, for one, has seen its profits dip. As reported by The Observer ("Airline industry faces grim year as Gulf carriers take over the world"; 17 June 2012), "Earlier this month, Qantas shares fell below A$1 for the first time since the carrier was privatized 17 years ago, following a profit warning blamed on a combination of hard-up Europeans cancelling their holidays and sharply rising fuel costs. Attempts to restructure the airline last year led to a dispute that saw the entire fleet grounded. Qantas’s biggest problem is the ever-more competitive environment."

But Qantas is not alone, as The Economist pointed out ("The American Airlines bankruptcy," 12 May 2012), "AMR Corp., the parent company of bankrupt American Airlines, announced that it will consider merging with another airline as part of a plan to emerge from bankruptcy. Most outside observers have expected this for some time -- United Airlines, which absorbed Continental, and Delta Air Lines, which merged with Northwest, are now significantly larger than American."

Competitiveness among the different airlines certainly has something to do with it. But the uncertainties in the global economy, along with insecurities in safety due to terrorists and other such problems, have contributed to increasing airplanes’ empty seats. As the WTO recently reported, "Slowing global output growth has led WTO economists to downgrade their 2012 forecast for world trade expansion to 2.5% from 3.7% and to scale back their 2013 estimate to 4.5% from 5.6%."

But assuming it’s true that the Philippine economy is poised for a take-off anytime soon (which, in no small part, is attributed to the Philippines’ young population; thus putting the lie for a need for an RH Bill), a significant part of that development will have to do with services and, specifically, tourism. As I wrote, however, previously ("A cloudy open skies," 20 January 2011), "Considerably, our tourism industry needs more than additional plane seats to get going: they need better airports and an efficient infrastructure. Both of which, we don’t really have. Such also needs careful and coordinated planning. None of which is being done effectively. We have a Category 2 rating from the International Civil Aviation Organization due to deficient aviation infrastructure and safety standards. All these are beyond the purview of local airlines. But they do fall squarely within the responsibility of the government. Traffic, peace and order, pollution, sanitation? These are not the responsibility of the local airlines. These are government’s. So why put the burden squarely on the shoulders of our airlines?"

And the need for emphasis in putting method and coordination for our air industry is highlighted by the fact that while Europe’s airline industry is not doing so well due to "rising tax regimes, inefficiencies in air traffic management, and the high cost of complying with poorly thought-out regulations," nevertheless, "IATA has also revised its forecast for Asian airlines’ profitability down from $2.3 billion to $2 billion, due mainly to weaknesses in the cargo industry." (The Economist, "The sick man of Europe," 11 June 2012)

IATA (International Air Transport Association) should know, what with its 60-year industry experience and a network that encompasses around 84% of total air traffic. It also assisted Oxford Economics in making the 2011 report "Economic Benefits from Air Transport in the Philippines". In it, the stakes are detailed on how important it is that we get our air industry right: "Improved connectivity gives Philippine-based businesses greater access to foreign markets, encouraging exports, and at the same time increases competition and choice in the home market from foreign-based producers. In this way, improved connectivity encourages firms to specialize in areas where they possess a comparative advantage. Where firms enjoy a comparative advantage, international trade provides the opportunity to better exploit economies of scale, driving down their costs and prices and thereby benefiting domestic consumers in the process. Opening domestic markets to foreign competitors can also be an important driver behind reducing unit production costs, either by forcing domestic firms to adopt best international practices in production and management methods or by encouraging innovation."

So while trade agreements and laws do matter, nevertheless, the little details matter more. St. Augustine was right: if you want to aim high, go deep and build better foundations. If we want our economic and tourism numbers to rise, our airplanes fly, we better take the time (as we’ve been saying for some time already) to see that matters on the ground are going right as well.