The trade war between the US and China could have a “significant impact” on the aviation sector if it continues to escalate, the head of the airline industry’s trade body has warned.
Alexandre de Juniac, chief executive of the International Air Transport Association, which represents almost 300 of the world’s largest airlines, said that the first round of tariffs between the two countries had been aimed at goods not transported by aircraft such as steel and aluminium.
However, “if it goes to smartphones or semiconductors or pharmaceuticals, that could have a strong impact on cargo,” he said.
The remarks of Mr de Juniac, who joined Iata in September 2016 after three years as chairman and chief executive of Air France-KLM, where he instituted cost-cutting measures, come against a backdrop of escalating tensions between China and the US.
German carmaker BMW on Tuesday cited international trade headwinds among factors that would hit profits in 2018.
Air cargo carries more than $6tn of goods each year, accounting for 35 per cent of global trade by value, according to Iata.
At airline group IAG, which owns British Airways, cargo was responsible for €1.1bn, or 4.7 per cent, of revenue in 2017.
Mr de Juniac warned that an all-out multilateral trade war could put executives off travelling. “If it has a macroeconomic impact on the business climate, it will have an impact on the passenger flows, especially on the business class.”
Business class typically accounts for 20-25 per cent of the revenues of long-haul airlines, he said, adding that “it’s an important part of their profitability”.
Aside from the concerns over rising trade tensions, Mr de Juniac also cited the rising oil price and uncertainties surrounding Britain’s exit from the EU among immediate challenges for the airline industry.
The price of Brent crude is trading at four-year highs of more than $80 a barrel. Jet fuel was $91.65 a barrel at the end of last week, up 28 per cent on last year.
Asked whether he expected to see any airline failures if the oil price kept rising, Mr de Juniac said: “I hope not — but it could happen if it goes over $100 a barrel. That makes some airlines fragile.”
Mr de Juniac said he was pessimistic that the record levels of delays for passengers of this summer, which he described as “a nightmare”, could be avoided next year.
“We have an enormous problem of an overcrowded sky in the summer season in Europe . . . We’re not very optimistic for the problem to be solved in 2019 because it requires some medium-term measures” such as training more air traffic controllers.
In July, Europe’s airline passengers experienced more than 135,000 minutes of in-flight delays on average each day. That was 94 days’ worth of delays every day — more than double the year before.
A lack of capacity and air traffic controller strikes were the main cause of the troubles, said Eurocontrol, which compiled the data and is responsible for the safety of air navigation in Europe.
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