Alexandre de Juniac says a more buoyant economic environment and rising demand for air travel will give regional airlines a boost
Iata head upbeat on regional airlines after a trying time
Alexandre de Juniac, the director-general of the trade body the International Air Transport Association (Iata), talks about the year in aviation.
Was 2017 a good year for Middle East aviation?
From an economic point of view, the industry had a good year. Global GDP growth was above expectations, triggering an increase in passenger numbers and stabilisation of yields. There were a few events that caused disruption – the US laptop ban, Brexit and the political situation in the Arabian Gulf, to name a few. Nonetheless, [Iata data shows] Middle East air demand rose 6.9 per cent year-on-year in October, up from 3.9 per cent in September, while capacity increased 5.3 per cent and load factor climbed 1 percentage point to 69.6 per cent. There is positive momentum heading into 2018.
Will regional airlines recover in 2018 after a tough period?
A more buoyant economic environment and rising demand for air travel will certainly give regional airlines a boost and we anticipate a good year for the industry. However, in the Middle East, we expect a slowdown in the rate of growth from previous years, bringing the Middle East in line with its regional peers. Middle East airlines’ profitability is set to double year-on-year in 2018, but this is from a low base as they were suffering in 2016.
What challenges do they face?
The region’s carriers face numerous challenges to their business models, from low oil revenues, regional conflict, the situation in the Gulf, which is worrisome, protectionist US trends, crowded air space and competition with the new ‘super connector’, Turkish Airlines. There is geopolitical uncertainty on a global scale, such as Brexit and the US-North Korea conflict. These issues are a threat to aviation and will continue in 2018.
What can the Gulf do to facilitate growth?
The Gulf has done well in building airport capacity. But that has not been matched with improvements in air traffic management to handle the growth. The airspace in the Gulf is congested. That leads to delays, missed connections and increased costs. Of course, the Gulf is not the only part of the world with airspace issues. China, the United States and Europe, all need major improvements.
What do recent aircraft orders suggest about future aviation trends?
We are seeing a lot of orders for short to medium-haul aircraft. These are coming mainly from the low-cost carriers, which are growing quickly, particularly in Europe and Asia. Take Airbus’ long-range A321neo, which allows for higher seat counts than wide-bodies on similar journeys. This is likely to continue as low-cost carriers expand and other airlines seek cost efficiencies.
How will the US-Gulf Open Skies debate play out in 2018?
They [the three largest US carriers – Delta, United and American Airlines] will probably continue to fight. But it will not be through any proposed tax arrangement like that of Senator Johnny Isakson at the end of last year. That is not the right way. But they will continue to push their views, whether or not they have the support of the US government.