Willie Walsh spoke on the topic. Willie and I had an exclusive interview at the Wings of Change conference in Istanbul, where the further path of the industry was discussed.
Two years after the swine flu, how is IATA doing?
Measures were started before I took over. There is still a lot of work to be done but the efficiency of our organization has improved greatly. Our commercial activities are strong and we see good demand for the products we offer. I expect more airline members to join as IATA is doing well. The data and analyses we deliver are very good. IATA is relevant during the Pandemic.
The CEOs of airlines were very busy and didn't have time to take care of other things. IATA was able to keep members up to date and explain to politicians what is happening in aviation.
Is the importance of European hubs, such as London, increasingly shifting to the East?
This part of the world is home to airports and runways.
Turkey values aviation in a way that can be seen. She gets a global connection. Also, not just because of other things.
Aviation is seen as a liability in western Europe.
Yes, but they don't pay much attention to aviation. Aviation has been in Europe for a long time. Politicians believe that aviation will be there no matter what they do. Aviation will not always be present.
And especially for Europe, politicians have no global perspective at all! They don't really understand what's going on in the Middle East with the airlines! I can remember a speech I gave in 2007 where London Heathrow was the world leader in terms of international traffic. Nobody wanted to believe that Dubai would one day overtake Heathrow. And today?
IATA Director General Willie Walsh
There are natural opportunities for airlines in the Gulf if you look at how traffic has flown around the world. There is an argument for more than one hub in the Middle East. It's reasonable to say that Dubai and Doha are fairly far away. It's not for Abu Dhabi. In London, we saw it with both airports. Two hubs are not compatible.
Europe is not doing right. There is still time to scratch the curve for the importance of aviation.
Europe has been defeated. It's too late for these opportunities to exist for Europe. There won't be a third runway at Heathrow. It is too late for that. There are challenges with the use of their runways.
In Istanbul, it is 24 hours a day. When they offer global connecting flights, it's very important that they have a good connection.
Is the chaos in Amsterdam something you expected? Which one is it?
I was surprised by Amsterdam. I thought it was a well managed airport. The management understood aviation. They have a management that doesn't know how to run an airport They know how to make money through the environment.
In Europe, the airport chaos was not as bad. The government has done a good job of keeping the workforce at Spain's airports. It was important that governments kept people. It was terrible in some airports. Some have recovered quickly after a short time.
There is an issue of consolidation of airlines in Europe. Is this going to increase in speed?
Airlines disappear due to either being bankrupt or being acquired. Weak airlines may go away. It's time for less volume and higher fuel costs. Some airlines have overcome the crisis. They were able to survive the summer. Most have done a good job. How much money was made will be important. The risk is not that high.
The airlines are in need of repairing their finances so the chances of a merger or acquisition are low. Everyone is very cautious when it comes to risk and how they got through the crisis. Taking over an airline requires a very good reason. synergies must be generated very quickly Competition authorities don't want it when there is a chance. There are obstacles for mergers in Europe.
There is an issue of closed airspace over Russia.
It will not open again soon. Everyone is facing a big challenge. It's shocking to see this on your doorstep. It's going to have an effect. It has been manageable. The traffic to Asia is very weak.
The oil price is one of the factors. If that had happened a decade ago, we wouldn't have had these aircraft at our disposal, without which the long, non-stop detours would not have been possible. You have the chance to do that. It's not the same as it used to be. It's not as big a challenge for airlines because they can focus on other areas. The capacity is still for sale.
The Asian market will pick up again.
That affects a lot. European airlines are not allowed to fly over Russian airspace. Will that be accepted in the competitive arena? It hurts the industry but not much. Not even a single dollar. Finnair was the only one, except for a few.
International traffic to China will take a long time to reach a higher level again. Because many airlines will say I'm no longer willing to take the risk of using assets to fly to China when the Chinese might lock down again overnight because of their Zero COVID strategy.
IATA Director General Willie Walsh
China is important for some airlines in Europe, but not as important as it used to be. Outside of Beijing, the profitability on routes to China is marginal. It is possible to make money flying to secondary cities in China. It's not immediate.
The relationship between the United States and the United Kingdom. Will there be more new partnerships?
I believe so. The dispute between Gulf Airlines and the US is over. Scott Kirby is not afraid of making difficult decisions. I believe he sees opportunities over time. The fact that this was done will make others follow suit.
IATA has a big challenge.
No matter where you look the environment is real. We think it's serious. The industry is united on this topic and has long term goals. There needs to be more sustainable alternative fuel produced. I think we are on the correct path. The airlines want to find opportunities.
You were the CEO of IAG. Are you still working this job?
Between being CEO of International Airlines Group and leading British Airways, that helped.
I liked running an airline the most. Challenges and the operational side. I liked it very much. I would like to run an airline today. I think it would be okay. I retired as an airline boss
What do you think about the Turkish aviation market? With all the inflation and the recession.
The aviation industry in Turkey is doing well. East-Meets-West is an important city in Istanbul. It is surprising from an economic point of view. There is no proof that this has an effect. Turkey is a great place to visit for international tourism.
Civil aviation has been impacted by the economic downturn.
Regarding the economic downturn. It has to do with how you view it. Civil Aviation can be unaffected by a recession. The number of passengers increased during a deep recession in 2009. Revenue is generated through pricing. There will be pressure on earnings in a recession. There is a period where returns are very high. Aviation doesn't need to be frightening.
Does it vary geographically?
It will be different depending on where you are. The risk of a recession is low according to economists. There are challenges in aviation.
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