Airline executives from the some 300 airlines represented by the IATA descended on Istanbul over the weekend for the start of the trade organization’s 79th annual general meeting. More than 1,520 participants are taking part in the event, the first being held since all Covid restrictions were lifted.
On the agenda are topics including sustainability, as carriers navigate the path toward achieving net zero carbon emissions by 2050, as well as airlines’ recovery from Covid, lessons learned from 2022’s host of operational challenges and how to achieve gender equality.
High air fares and labor shortages from pilots to ground handling staff are also expected to be hotly debated. Next year’s IATA AGM will be held in Dubai, in June.
The Chinese market remains “very weak” at about half the level it was before Covid. “We think India has better growth prospects than China for us and we are putting more capacity in.”
Business is booming there and in other markets, Joyce said, adding his voice to other airline executives in Istanbul discussing air travel’s leisure-driven comeback. Demand is double pre-Covid levels in the Australian carrier’s domestic market and 80% higher for international flights, he said. “We have nowhere near that capacity to meet that demand.”
Planemakers Voice Optimism
Airbus SE Chief Commercial Officer Christian Scherer voiced cautious optimism that the supplier snags and production issues that have slowed an increase in narrowbody jet output may be starting to subside. “You never know where the issue is going to come from,” he told Bloomberg TV’s Guy Johnson. “There seems to be — and I say this very carefully, Guy — a tendency towards stabilization.” Scherer added that there are still some areas of the supply chain, including engines, “that are holding us back.”
His comments follow a similarly careful assessment by rival Boeing Co. of its 737 Max production ramp up. Speaking at last week’s Bernstein Strategic Decisions event, CEO Dave Calhoun, pointed out that the US planemaker has always expected a bumpy road. “Our belief is, and our experience, more importantly, is that these bumps are getting lower, smaller,” Calhoun said. “The resolution of them is getting faster.”
Every Weekend’s a Holiday
The advent of hybrid work has made “every weekend a holiday” and gives people more time to travel, United Airlines Holdings Inc. CEO Scott Kirby said. After two years of Covid lockdowns “people will no longer take for granted their ability to travel and experience,” Kirby said, when asked about whether elevated levels of demand for travel are sustainable.
Kirby was less upbeat about business travel, saying the “US economy is in a business recession.” “We see that in our business traffic, but you can also see that in the kinds of companies that sell to business,” he said.
Airbus Hits Back
“Some observers believe it or not, right here at the IATA AGM, are actually making the point that the supply constraint versus significantly higher demand might be not so bad, because it’s helping airlines to increase yields,” Airbus’s Scherer said when asked earlier about production delays.
“We don’t play that game. We are not throttling back or putting a lid on our ability to deliver the airplanes that have been ordered,” he said, describing the delays as a “matter of constraint deep down in the supply chain, not a voluntary action of retaining.”
Most customers understand the supply-chain constraints still facing the industry, he says. “We will deliver the airplanes that have been ordered.”
Blocked Funds Threaten Connectivity
Rising levels of blocked funds are a threat to airline connectivity, with unavailable finances increasing by 47% to $2.27 billion as of April from $1.55 billion in April last year.
Nigeria is the worst offender, at $812.2 million, followed by Bangladesh at $241.1 million. Algeria, Pakistan and Lebanon round out the worst five.
IATA urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate the funds, which typically arise from the sale of tickets, cargo space and other activities.
Virgin Has Room for Growth
Virgin Atlantic Airways Ltd., which expects record revenue this year, has options for more Airbus SE widebody jets. “There’s always room for growth,” Chief Executive Officer Shai Weiss says in an interview. The carrier expects to have a fleet of 50 planes by 2030. Growing beyond that will depend on Virgin securing slots at London’s Heathrow airport, Weiss says. The carrier doesn’t have any plans to return to London’s Gatwick airport, which it pulled out of during the pandemic.
Global Airline Profit Estimate Jumps
Global industry profits are now expected to reach $9.8 billion this year, more than double the $4.7 billion forecast in December, the International Air Transport Association said in a statement Monday. IATA expects some 4.35 billion passengers to travel in 2023, around 96% of 2019 levels.
“Taking everything into account we believe this will be a good year for aviation,” Willie Walsh, the director general of IATA, said.
Summer Air Travel Will Be Better
This summer will be better than last for air travel, but there are still challenges in areas such as air-traffic control and strikes in France, IAG CEO Luis Gallego says in interview with Bloomberg TV.
Airbus Widebody Crunch
Airbus said the widebody aircraft market is set to experience similarly lengthy wait times as the workhorse single-aisle segment because airlines are rapidly stocking up on long-haul jets, while supply disruptions on equipment like seats limits output.
The European planemaker is already sold out of its bestselling A321neo aircraft until 2029, and Scherer said the company will focus on offering its more expensive twin aisle models to “proven partnerships” rather than “chasing every opportunity that presents itself.”
$5 Trillion Required
A cumulative $5 trillion will be needed for aviation to achieve net zero by 2050, according to the latest forecast from IATA, which on Sunday released a series of roadmaps toward the goal. This amount would cover technological advancements, infrastructure developments and operational improvements.
“I must emphasize that the roadmaps are not just for airlines,” IATA’s Walsh said. “Governments, suppliers and financiers cannot be spectators in aviation’s decarbonization journey. They have skin in the game.”