Airlines face challenges as global demand slows

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Airlines face challenges as global demand slows.

The global airline sector faces serious headwinds against a triple challenge of economic decline, punitive taxes and regulation.

The warning was issued as Iata released figures for September showing an eighth consecutive month of below average demand growth.

European carriers suffered the weakest performance this year.

The result was affected by the demise of a number of airlines such as Thomas Cook, along with pilot strikes in addition to slowing economic activity and faltering business confidence in many key European economies

The airline trade association’s director general and CEO Alexandre de Juniac said:  “Given the environment of declining world trade activity and tariff wars, rising political and geopolitical tensions and a slowing global economy, it is difficult to see the trend reversing in the near term.”

He added: “These are challenging days for the global air transport industry. Pressure is coming from many directions. In a matter of weeks, four airlines in Europe went bust. Trade tensions are high and world trade is declining.

“The IMF recently revised down its GDP growth forecasts for 2019 to 3%. If correct, this would be the weakest outcome since 2009, when the world was still struggling with the global financial crisis.”

The Iata chief called on governments to recognise the power of aviation connectivity “to ignite the economy and drive job creation”.

But he said: “Instead, too many governments – in Europe in particular – are fixated on aviation as the goose that lays the golden eggs of taxes and fees.

“It’s the wrong approach. Aviation is the business of freedom. Governments should harness its power to drive GDP growth, not tie it down through heavy and punitive tax and regulatory regimes.”

International passenger demand rose 3%, compared to September 2018, but a drop from 3.6% year-on-year growth achieved in August.

Overall demand for the month was unchanged from August’s levels although the load factor of 81.9% was a record for any September.

Aviation News