Could the Pandemic End Air Transport Liberalization?

Governments are looking inward and becoming more protectionist in response to the pandemic

Pushing Back: Inside the Issue

Brian Pearce has been IATA's chief economist since 2004, and in that time he's seen his share of exogenous shocks to the industry: SARS, MERS, the global financial crisis, the historic spike in oil prices, and now Covid-19. The industry has weathered all of them, but the breadth and scale of this pandemic has left no almost no airline unscathed. And governments have responded, many stepping up with financial support for the industry. But what will happen after? Pearce notes in this week's Feature Story that more governments are turning inward and becoming increasingly protectionist. That doesn't bode well for an industry that by its definition is global. It especially doesn't bode well for future consolidation or liberalization. And just how profitable was the industry before the pandemic?

Elsewhere in this issue, even though Norse Atlantic reached an agreement with the largest U.S. flight attendants union, pilots unions remain skeptical. Fallout continues after the Belarus hijacking incident, with governments moving quickly to ban flights from that country and to bar their airlines from overflying Belarus. This raises concerns that air transport and safety are becoming politicized and that the tit-for-tat could escalate. Are U.S. ultra-low-cost carriers best positioned to emerge from the crisis? Opinions are split. Iberia is returning aircraft to its fleet and re-converting some "preighters" back to passenger aircraft — perhaps a sign that travel demand is returning.

Meanwhile, Covid-19 has shown its not done with us. While vaccination rates in Europe and North America climb and societies return to normal, infections elsewhere are rising. Countries that were standouts early in the pandemic — Uruguay, Vietnam, and Japan, for example — are grappling with new surges. Disturbing new variants continue to evolve. While U.S. airline CEOs are bullish about the potential return of business travel, it's becoming increasingly clear that globally, this will be a second lost year for the airline industry.

Verbulence

"I think the volumes of domestic [business] travel 12 months forward are actually going to be even higher than the domestic volume we saw in 2019 alone because there is such a demand.”

Delta CEO Ed Bastian on the surge in U.S. business travel could begin as soon as July.

The Airline Weekly Lounge Podcast

New episodes drop every week and are available wherever you get your podcasts and on AirlineWeekly.com. In the latest podcast, Edward "Ned" Russell and Madhu Unnikrishnan debate whether European airlines face another lost summer, and why is there so much merger talk in Brazil? Listen to the episode.