Passenger traffic globally is at over 90% of 2019 levels. Airports are busier, hotel occupancy is rising, local economies are reviving, and the airline industry has moved into profitability.
Yet Willie Walsh, Iata DG, said in his keynote address at the Iata AGM in Istanbul yesterday, June 5, that airlines’ recovery was being threatened by their business partners. He called out South Africa’s SOE airport operator Acsa and SA Air Traffic Navigation Services, along with Dutch airport Schiphol, for their mooted fees increases (see today’s lead story “Iata lambasts Acsa and SA ATNS).
Walsh pointed out that airline margins were “wafer-thin” and on combined revenues of US$803 billion (R15,42 trillion) over the year, airlines would share $9,8 billion (R188 billion) in nett profit this year.
This means airlines will have made, on average, $2,25 (R43,21) per passenger – less than the cost of a NYC subway ticket. But Walsh acknowledged that recovery was taking place with some velocity, considering that in 2020 the aviation industry lost $76 (R1 459,53) per passenger.
Inflation, higher costs and, in some areas, a shortage of labour remained problems. “Unfortunately, many of those we do business with are adding to these pressures,” said Walsh.
He listed them.
- “OEM suppliers (aircraft manufacturers) have been far too slow in dealing with supply chain blockages that are both raising costs and limiting our ability to deploy aircraft.”
- “Oil companies did very well on our tab while the crack spread for jet fuel was at historic highs for most of 2022 until April this year.” (The crack spread is the price differential between crude oil and the fuel products manufactured from it.)
- “And there are grievous examples of some airports and Air Navigation Service Providers shifting the costs of their inefficiency to airlines. On this point, I can now confirm that Schiphol Airport has no shame. After a self-made operational disaster in 2022, the airport continues its three-year 37% charges hike, with 12% this year.
- “In South Africa, airports want a 38% charges increase, only to be outdone by ATC demands for a 63% hike.”
- “And, back to Europe, airlines are paying for a €1,9 billion (R39 billion) addition to the air traffic management cost base in 2022. You’d expect good performance. But delays were triple what was anticipated. And capacity and environment targets were missed.
- “With such bad behaviour on open display, calls for lighter touch economic regulation of our monopoly suppliers must not be taken seriously by any government.”
Walsh bemoaned the fact that fragmentation was growing because governments were:
- Not acting globally
- Not implementing completely, or
- Simply inventing local solutions.
“Passenger rights is an example of the latter. Over a hundred jurisdictions have developed unique regulations intended to protect air travellers. And at least a dozen governments are looking to join the group or toughen what they already have.”
Iata called for existing global standards to be used in airport slots rules, capacity declarations by ATNS, airports and border control.
Walsh discussed Iata’s battle with the Dutch Government over the latter’s capacity cut flights at Schiphol to manage noise, saying: “An industry focused on safety cannot accept the politicisation of technical discussions. And ignoring the rules-based order established by global standards is a slippery slope to confusion that we airlines can ill-afford and our customers will not tolerate.”
Walsh also spoke on SAF and sustainability, highlighting that sustainability issues were not only airline issues.
