Global airline summit to tackle travel boom, climate goals

By Tim Hepher, Joanna Plucinska and Aditi Shah

ISTANBUL (Reuters) – Airlines will ride the crest of a faster-than-expected recovery and discuss ways of translating climate pledges into action at a summit buoyed by a return to business as usual next week.

The influential International Air Transport Association (IATA) holds its annual meeting on June 4-6 with many of its 300 carriers enjoying higher fares following the pandemic, tempered only by plane shortages and faltering supply chains.

After global airlines stared into the abyss with cumulative losses of $190 billion and increased debts during the pandemic, their Istanbul summit marks a turning point for the $800-billion industry, which is set to return to profit this year.

“There is strong confidence in demand for aviation still, and it’s … a trend around the world,” Qantas Chief Executive Alan Joyce, a veteran crisis manager who will be attending his last IATA gathering before retiring in November, told investors.

Global tensions including war in Ukraine and economic uncertainty have done little so far to halt the ticket rush in many markets, prompting experts to declare the recovery more permanent than last year’s post-lockdown “Revenge Travel”.

“Demand to travel is off the charts. It’s at record levels as people not only catch up from three years of not travelling but put travel and experiences at the top of their wish list,” said travel expert Paul Charles, founder of The PC Agency.

“Prices will continue to be sky-high as well,” Charles said.

Last year’s IATA meeting brought together an industry still reeling from its worst crisis, having been moved to Qatar from Shanghai at a time when China’s borders remained closed.

Against the steadily improving backdrop, IATA is due to update widely watched industry forecasts at this year’s event, which will be hosted by Turkey’s Pegasus Airlines.

It is among the first times a budget airline has led the gathering, whose formality and U.N.-style rows of delegations reflect IATA’s roots as an international body of state carriers.

Low-cost carriers are seen among the biggest winners from the COVID-19 pandemic due to their greater flexibility.

RISKS

IATA currently sees the whole industry returning to a profit of $4.7 billion in 2023 from last year’s $6.9 billion loss.

Domestic travel has regained pre-pandemic levels and overall passenger traffic grew 46% in April, the group said on Thursday.

Despite strong summer bookings, many analysts say risks remain. And air transport remains in the firing line of environmentalists and some politicians, especially in Europe.

The head of the world largest aircraft leasing company, AerCap CEO Aengus Kelly, told Reuters on the eve of the meeting that supply constraints could last for “many years”.

Oil meanwhile remains 20% above pre-crisis levels and many wonder how long consumers can ignore rising borrowing costs.

Longer term, airlines face pressure to set out at the summit how they aim to meet a target of net-zero emissions in 2050.

Qatar Airways CEO Akbar Al Baker last week questioned whether the goal could be reached, citing inadequate production of alternative Sustainable Aviation Fuel (SAF). He stressed however that new-generation jets were cleaner than those they replaced.

There is also little consensus on who should pay to ramp up SAF output, while environmentalists say the plans are flawed.

Airlines meeting in Istanbul will also discuss non-CO2 emissions like aircraft contrails for the first time.

Brussels-based environmental group T&E said airlines have delayed action on the streaks of condensation which scientists say can create a harmful warming effect. Airlines say avoiding contrails could end up burning more fuel and releasing more CO2.

In another hot-button issue, airlines will debate how to avoid a repeat of last year’s widespread travel disruption while campaigning for harmonised rules on passenger compensation.