29th May 2019 | Elizabeth Sasu
Trade wars, rising costs and how to cope with a doubling of demand over the next two decades are among the issues to be discussed as Seoul is transformed into the world’s aviation capital this weekend by the International Air Transport Association’s 75th annual meeting
It is the first time the IATA global summit is being held in South Korea, where IATA has eight members that include host Korean Air.
De Juniac said this year was expected to be the 10th consecutive profitable year for the airline industry with shareholders rewarded with a return on invested capital above its weighted cost for the fifth year.
But the industry was seeing headwinds and the last six months had been “pretty tough for airlines”.
“We have seen the global trade weakening due to trade wars, due to the increase in fuel price,’’ he said. “So globally we have seen an increase in costs, we see geopolitical tensions that have sometimes have led to airspace closures in some key regions.”
But there was good news, he said, in that passenger demand was still holding up.
IATA Wednesday released passenger demand figures for April that showed global demand rose 4.3 percent in April and that an 82.8 percent load factor was a record for the month.
It was a different trend for global air freight markets, where April demand fell 4.7 percent compared to last year and continued a negative trend in year-on-year demand evident since January.
Among the issues to be discussed by more than a thousand industry leaders attending the event is how aviation will handle the doubling of demand for air connectivity expected over the next 20 years.
“So we have to prepare our industry to face this tremendous and positive future,” de Juniac said. “To accommodate that demand, as usual but perhaps more than usual, we must be safe, we must be secure, we must be sustainable.
“Secondly, we must have adequate, affordable infrastructure developed with our input — the user input.”
“Thirdly, we must attract and train the skilled workforce.”
Airlines also had to continue to demonstrate to government the value of aviation and increase diversity in the workforce, de Juniac said,
“That means attracting more women to this industry and promoting those are in it to positions of leadership,” he said.
“We have to work hard because we are lagging behind.”
He noted that 2019 was a big year for sustainability and airlines had been tracking their carbon emissions since January ahead of the 2020 start of the voluntary phase of the global carbon offset program, CORSIA.
Asked about the biggest global challenge facing airlines, de Juniac nominated rising costs in the short term.
“It is fuel costs, labor costs, infrastructure costs because it has an immediate impact on their P&L and on their profitability and ability to invest.”
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