By Lisa Barrington
(Reuters) -Geopolitical tensions, aircraft shortages and ambitious environmental targets will deliver a host of challenges to global airline bosses at an annual summit next week, with softening fares completing a delicate outlook for carriers.
The influential International Air Transport Association (IATA), which represents more than 300 airlines and over 80% of global air traffic, holds its annual meeting on June 2-4 in Dubai, the world’s busiest international hub.
Aviation leaders have said the pandemic that grounded most of the world’s fleet and ravaged airline balance sheets at the start of the decade is finally in the rear-view mirror.
The industry returned to profit in 2023 and air passenger traffic touched 2019’s record numbers early this year, IATA says. Global airline capacity in the second quarter of 2024 is 4% higher than in 2019, according to aviation data provider OAG.
However airlines have warned yields – the average price paid by a passenger to fly one mile – are under pressure from rising costs and competition as networks reopen or grow.
Conflicts and geopolitical tensions are causing longer routes for airlines, and the aviation industry faces growing questions over whether it can achieve a target for net-zero carbon emissions by 2050 that IATA adopted in 2021.
“The jury is out and there is a lot to be done,” Airbus CEO Guillaume Faury told the VivaTech conference last week, when asked if aviation would meet the target.
Airfares in Europe and Asia are starting to plateau or fall, in a sign that a post-COVID “travel at all costs” boom is waning.
“The year ahead could be challenging for aviation,” Luis Gallego, the head of British Airways owner IAG said in its annual report.
Singapore Airlines (OTC:) said this month passenger yields were moderating, after posting a record profit for the second consecutive year.
“It’s a mixed bag,” said OAG analyst John Grant, referring to the global industry. Results in 2023 and 2024 were exceptional but there is a sense of softening now occurring, he said.
IATA was founded in 1945 as part of a cluster of bodies that designed the framework for peaceful aviation following World War II. Once a price-setting organisation, it is now best known as a vocal defender of aviation’s role in an inter-linked economy.
Environmental critics say the industry’s growth is at odds with efforts to curb emissions and say its targets, largely based on sustainable aviation fuel, do not go far enough.
Turbulence on Singapore Airlines and Qatar Airways this month that led to dozens of passenger and crew injuries have put cabin safety and the link between climate change and turbulence in the spotlight.
The IATA meeting is also likely to rekindle debate over passenger rights as some countries attempt to mimic a European Union compensation scheme. Airlines say the rules could affect safety, while passenger groups say some airlines fail to pay on time.
GULF EXPANSION
The gathering comes as the Gulf, home to host carrier Emirates and smaller rival Qatar Airways, experiences a new phase of competition and expansion.
Saudi and Indian airlines are bringing new capacity, and Saudi Arabia and the UAE have announced new mega-airport projects.
Hosted by the world’s largest operator of long-haul aircraft, Emirates, the IATA meeting is also the first major airline gathering since a quality and corporate crisis engulfed Boeing (NYSE:) after a mid-air panel blowout in January.
Boeing is facing investigations by U.S. regulators, possible prosecution for past actions and slumping production of its strongest-selling jet, the 737 MAX.
Airbus is also battling to meet delivery targets and many of its existing narrow-body planes face persistent problems with delays to the maintenance of their Pratt & Whitney engines.
Qatar Airways CEO Badr Mohammed Al Meer this month said Airbus and Boeing need to put more pressure on suppliers to reduce delays.
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