Airline Industry Sees Long-Term Rebound for Sector

The International Air Transport Association (IATA) logo is seen at the International Tourism Trade Fair ITB in Berlin, Germany, March 7, 2018. REUTERS/Fabrizio Bensch
The International Air Transport Association (IATA) logo is seen at the International Tourism Trade Fair ITB in Berlin, Germany, March 7, 2018. REUTERS/Fabrizio Bensch
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Airline Industry Sees Long-Term Rebound for Sector

The International Air Transport Association (IATA) logo is seen at the International Tourism Trade Fair ITB in Berlin, Germany, March 7, 2018. REUTERS/Fabrizio Bensch
The International Air Transport Association (IATA) logo is seen at the International Tourism Trade Fair ITB in Berlin, Germany, March 7, 2018. REUTERS/Fabrizio Bensch

After flying into the financial turbulence of the Covid pandemic, the airline sector expects passenger traffic to take off despite concerns about the industry's impact on climate change.

In its latest look at trends for the sector, the International Air Transport Association (IATA) said it doesn't expect world air traffic to resume to its pre-pandemic level before 2023.

But over 20 years, air traffic should almost double, from 4.5 billion passengers in 2019 to 8.5 billion in 2039.

That is, however, a drop of one billion passengers from IATA's pre-crisis forecast.

Nevertheless, that will be good news for aircraft manufacturers, who slowed down production during the crisis as airlines cancelled orders to stay financially afloat.

Airbus has already announced it plans to step up the manufacturing cadence of its best-selling A320 single-aisle aircraft and should reach a record level already in 2023.

Boeing, for its part, forecasts that airlines will need 43,110 new aircraft through 2039, which will result in a near doubling of the global fleet. Asia alone will account for 40 percent of that demand.

As with the September 11 attacks or the global financial crisis of 2007-2009, "the industry will prove resilient again," Darren Hulst, vice president of marketing at Boeing, said last year.

Marc Ivaldi, research director at the Paris-based School for Advanced Studies in the Social Sciences, noted that only one percent of the population currently uses air travel.

"With the simple demographic rise and the fact that people become richer there will be rising demand for air travel and thus for aircraft," he told AFP.

If the biggest aircraft fleets are currently in the United States and Europe, the biggest increases are expected in Asia and the Middle East, the consulting firm Oliver Wyman said in a recent study.

Airbus delivered 19 percent of its planes to China, more than the United States, and this trend is not expected to change.

In many emerging countries where the middle class is expanding air travel is becoming possible for more and more people.

"Among Asia's emerging nations, one of the greatest aspirational goals is simply the ability to fly internationally," said the Center for Aviation (CAPA).

"It is a sign of social and economic maturity and permits experiences which were unthinkable for their parents."

It noted that these people were unlikely to share the growing sentiment among some people in the West towards reducing air travel to reduce one's carbon footprint.

"For these new would-be flyers, the whole concept of 'flight shaming' at a grass roots level is grossly alien," said CAPA.

"Consequently, in Asia flight shaming is unlikely to gain much traction," it added.

The "flight shaming" or "flygskam" movement took off in Sweden in 2018 to challenge the growing popularity of air travel, which had boomed in Europe thanks to budget airlines that made weekend getaways across the continent affordable to a wider public.

In 2019, air traffic declined by four percent in Sweden -- but it hit a record across Europe, according to the air traffic control body Eurocontrol.

EHESS's Ivaldi believes flight shaming will have little long-term impact.

"Someone who makes one flight per year in a plane, do you really believe that they will say that it is too polluting and give it up?" he said.

But countries like Sweden have begun to reintroduce night trains to give travelers greener options to travel.

France, which is boosting its night trains, is also cutting domestic flights when it is possible to make the journey by train in under two and a half hours.

Ivaldi believes that to be a largely empty gesture as fast trains have already taken most of the market on such routes.

The air sector has pledged to cut its carbon emissions in half by 2050 from their level in 2005.

Airlines have an economic incentive to do so, as adopting more fuel efficient planes reduces operating costs.



Türkiye's Central Bank Raises Inflation Forecasts, Vows Tight Policy

FILED - 24 May 2018, Türkiye, Istanbul: Turkish lira are kept fanned out. Photo: Can Merey/dpa
FILED - 24 May 2018, Türkiye, Istanbul: Turkish lira are kept fanned out. Photo: Can Merey/dpa
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Türkiye's Central Bank Raises Inflation Forecasts, Vows Tight Policy

FILED - 24 May 2018, Türkiye, Istanbul: Turkish lira are kept fanned out. Photo: Can Merey/dpa
FILED - 24 May 2018, Türkiye, Istanbul: Turkish lira are kept fanned out. Photo: Can Merey/dpa

Türkiye's central bank raised its year-end inflation forecasts for this year and next to 44% and 21% respectively on Friday, and Governor Fatih Karahan vowed to keep policy tight to propel the disinflation process and hit targets.

The bank's previous inflation report three months ago forecast year-end inflation of 38% in 2024 and 14% next year, Reuters reported. The revision underlines its tougher-than-expected battle against inflation that began with aggressive rate hikes 18 months ago.
Presenting a quarterly update in Ankara, Karahan cited improvement in core inflation trends even as service-related price readings are proceeding slower than anticipated. But even in that sector, inflation is gradually losing momentum, he said.
"We will decisively maintain our tight monetary policy stance until price stability is achieved," he said. "As the stickiness in services inflation weakens, the underlying trend of inflation will decline further in 2025."
October inflation remained loftier than expected, dipping only to 48.58% annually on the back of tight policy and so-called base effects, down from a peak above 75% in May.
Monthly inflation - a gauge closely monitored by the bank for signs of when to begin rate cuts - rose by 2.88% in the same period on the back of clothing and food prices.
The bank has hiked rates by 4,150 basis points between June 2023 and March 2024, to 50%, as part of an abrupt shift to orthodox policy after years of low rates aimed at stoking growth.

President Recep Tayyip Erdogan, who in past years was viewed as influencing monetary policy, had supported the previous unorthodoxy. It triggered a series of currency crashes and sent inflation soaring.

Erdogan was quoted on Friday as telling reporters that "no one should doubt" the steady decline in inflation and that economic steps would continue with discipline and determination to ease price pressures.

The central bank warned last month that a bump in recent inflation readings increased uncertainty, prompting analysts to delay expectations for the first rate cut to December or January.

Karahan said the new inflation forecasts were based on maintaining tight policy, adding the bank would do "whatever is necessary" to wrestle inflation down, and pointing to what he called a significant fall in the annual rate since May.

He said the slowdown in domestic demand continues at a moderate pace and the output gap has continued to decline in the third quarter.