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Geopolitical tensions, aircraft shortages and ambitious environmental targets will present a host of challenges to global airline bosses at an annual summit next week, with tariff softening completing a precarious prospect for airlines.
The influential International Air Transport Association (IATA), which represents more than 300 airlines and more than 80 percent of global air traffic, will hold its annual meeting from June 2 to 4 in Dubai, the world’s busiest international hub.
Aviation leaders have said the pandemic that grounded most of the world’s fleet and devastated airline balance sheets early this decade is finally in the rearview mirror.
The sector returned to profitability in 2023 and air passenger traffic reached 2019’s record numbers early this year, IATA says. According to aviation data supplier OAG, global aviation capacity will be 4 percent higher in the second quarter of 2024 than in 2019.
However, airlines have warned that returns – the average price a passenger pays to fly one mile – are under pressure from rising costs and competition as networks reopen or grow.
Conflict and geopolitical tensions are causing longer routes for airlines, and the aviation industry is facing increasing questions about whether it can meet the 2050 net-zero carbon emissions target adopted by IATA in 2021.
“The jury is out and there is still a lot to be done,” Airbus CEO Guillaume Faury said at the VivaTech conference last week, when asked whether aviation would meet the target.
Airfares in Europe and Asia are starting to stagnate or fall, a sign that the post-COVID boom of “travel at any price” is waning.
“The year ahead could be challenging for aviation,” Luis Gallego, head of British Airways owner IAG, said in his annual report.
Singapore Airlines said this month that passenger revenues were moderating after posting record profits for the second consecutive year.
“It’s a mixed bag,” said OAG analyst John Grant, referring to the global industry. The results in 2023 and 2024 were exceptional, but there is now a sense of softening, he said.
IATA was founded in 1945 as part of a cluster of agencies that designed the framework for peaceful aviation after World War II. Once a price-setting organization, it is now best known as an outspoken advocate of aviation’s role in an interconnected economy.
Environmental critics say the industry’s growth is at odds with efforts to cut emissions and say the targets, which are largely based on sustainable jet fuel, don’t go far enough.
Turbulence at Singapore Airlines and Qatar Airways this month, which led to dozens of injuries to passengers and crew, has put a spotlight on cabin safety and the link between climate change and turbulence.
The IATA meeting is also likely to revive the debate over passenger rights as some countries try to emulate a European Union compensation scheme. Airlines say the rules could affect safety, while passenger groups say some airlines are not paying on time.
EXPANSION OF THE GULF
The meeting comes as the Gulf, home to host airline Emirates and smaller rival Qatar Airways, enters 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.
The IATA meeting, hosted by Emirates, the world’s largest long-haul airline operator, is also the first major gathering of airlines since Boeing was engulfed in a quality and business crisis following an air panel explosion in January.
Boeing is facing investigations by U.S. regulators, possible prosecution for past actions and declining production of its best-selling plane, the 737 MAX.
Airbus is also struggling to meet delivery targets and many of its existing narrow-body aircraft are experiencing ongoing problems with maintenance delays on their Pratt & Whitney engines.
Qatar Airways CEO Badr Mohammed Al Meer said this month that Airbus and Boeing should put more pressure on suppliers to reduce delays.
