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.



China Approves $840B Plan to Refinance Local Government Debt, Boost Economy

Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
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China Approves $840B Plan to Refinance Local Government Debt, Boost Economy

Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)
Visitors walk past a shop under construction with a dragon mural at the Sanlitun shopping district in Beijing, Friday, Nov. 8, 2024. (AP Photo/Ng Han Guan)

China on Friday approved a 6 trillion yuan ($839 billion) plan to help local governments refinance their mountains of debt, in the latest push to rev up growth in the world’s second largest economy.

The plan will be implemented over the next three years, Xu Hongcai, vice-chairman of the National People's Congress's financial and economic committee, said at a news conference Friday.

Finance minister Lan Fo'an estimated that the hidden debt of local governments was 14.3 trillion yuan ($2 trillion) at the end of 2023. Hidden debt refers to debt that has not been disclosed publicly, The Associated Press reported.

Lan said 2 trillion yuan would be allocated each year from 2024 to 2026 to help local governments resolve their debts. He estimated that the amount of hidden debt will drop to 2.3 trillion yuan ($320.9 billion) by the end of 2028.

Officials also said Friday that the ceiling to issue special bonds will be raised to 35.52 trillion yuan ($4.96 billion) from 29.52 trillion yuan ($4.12 billion) for local governments.

Lan said that the implementation of such a large-scale replacement measure indicates a “fundamental shift” in China's approach to debt restructuring and said that China’s government debt risk was “controllable.”

Analysts have called for bold, multi-trillion-yuan measures to reinvigorate the world's second largest economy, which has yet to bounce back fully from the COVID-19 pandemic.
Local government debts have ballooned partly due to high spending and low tax revenues during the pandemic, but also due to a downturn in the property industry, since sales of land use rights, a key source of local government revenue, have sagged.

The central bank loosened restrictions on borrowing in late September, sparking a stock market rally, but economists say the government needs to do more to ignite a sustained recovery. Government officials have indicated that could come at this week's meeting of the Standing Committee of the National People's Congress, which must give official approval to any new spending.

The economy has shown signs of life in the past two months. Purchase subsidies offered to people who trade in old cars or appliances for new ones helped auto sales rebound in September. A survey of manufacturers turned positive in October after five straight months of decline, and exports surged 12.7% last month, the largest increase in more than two years.

For most of the year, the ruling Communist Party appeared more focused on addressing long-term structural issues with the economy rather than short-term ones. Previous steps to boost the economy were piecemeal, seemingly aimed at keeping the economy afloat rather than sparking a robust recovery.

In recent weeks, the party has signaled a growing concern about the economy's sluggishness as it tries to meet its goal of achieving growth of around 5% this year. The central bank's monetary easing was followed by government pronouncements that it still has ample funds to pump into the economy.

Still, the longer-term goals of transforming China into a high-tech and green energy economy seem likely to remain the chief aims of the Communist Party, which doesn't face election pressures like the ones that toppled the Democrats and swept Donald Trump's Republicans to power in America this week.