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Abu Dhabi, UAEFriday 16 November 2018

Global airline industry body warns of travel 'chaos' in no-deal Brexit 

IATA forecasts air passenger numbers could double by 2037 but those numbers could shrink under increasing protectionism

September’s traffic growth though in line with the long-term average, reflects a moderation compared to recent months, said Alexandre de Juniac, IATA’s Director General and CEO.
September’s traffic growth though in line with the long-term average, reflects a moderation compared to recent months, said Alexandre de Juniac, IATA’s Director General and CEO.

Global airline industry body IATA urged the UK and European union to quickly reach an agreement on air services management ahead of a possible no-deal Brexit, warning that millions of passengers could face "chaos" at airports without a back-up plan.

Flight disruptions for both passengers and cargo and a "nightmare" at airports are possible if an agreement is not reached within five months, Alexandre de Juniac, chief executive of the International Air Transport Association (IATA) said during a media call on Wednesday.

"We predict chaos if nothing is done," Mr de Juniac said. "The industry is not being consulted. We urgently require transparency so we can prepare after March 2019."

The UK is set to leave the European Union in just over five months but the parties have yet to reach a withdrawal agreement and are preparing for a worst-case scenario of a no-deal or hard Brexit.

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Separately, IATA released its 20-year forecast report that showed global air passenger numbers will double to 8.2 billion by 2037, boosted by strong travel demand in Asia-Pacific, but it warned growth could be dampened by rising protectionism.

IATA forecasts passenger numbers will increase by 3.5 per cent, based on compound annual growth, over 20 years but that may be curtailed to 2.4 per cent if restrictions on free trade, such as imposing tariffs, continue in what it calls a "reverse globalisation" scenario. The industry body revised its growth forecast of 3.5 per cent down by 0.1 per cent from an earlier report, which means 60 million fewer passengers over 20 years.

Middle East airline passenger numbers are expected to swell 4.4 per cent to 501 million passengers by 2037. A global rise in protectionism could weigh on that growth forecast as well, slowing to 3.3 per cent instead.

"Passenger traffic to, from and within the UAE and Saudi Arabia is expected to grow strongly over the next 20 years, helped by favorable demographic trends," IATA said in a statement. "Both countries are expected to see strong growth on the passenger markets to and from India."

China will knock the US out of its top ranking as the world's biggest aviation market by 2025 driven by its economic growth, higher incomes and massive population, the report showed. It will add one billion more passengers to reach 1.6 bn by 2037.

The US will drop to the second biggest aviation market to reach 1.3 bn by 2037 and India will jump to third place with 572 million passengers.

With global air travel demand forecast to continue growing, pressure on infrastructure will increase and governments must respond with measures to improve infrastructure to keep up with the pace of growth, Mr de Juniac said.

The industry is grappling with a "more adverse economic environment" stemming from a rise in oil prices and recent currency crises in emerging markets," he said.

The strengthening of the dollar, combined with a depreciation in local currencies in some markets, is hurting some airlines as they pay for certain costs in dollars but earn their revenues in local currencies. Emerging markets such as Turkey, Argentina and South Africa have seen their currencies plunge recently.

On Brexit, IATA said it would provide solutions if asked but has so far not taken part in conversations.