Airlines association cuts industry's profit outlook due to trade barriers, delivery delays
The head of a global airlines industry body said on Monday that growing trade barriers risked damaging the economy and the air travel sector, and 'unacceptable' plane delivery delays were frustrating growth plans at a time of record passenger numbers.
The International Air Transport Association (IATA) shaved a key forecast for 2025 industry-wide profits, blaming trade tensions and declining consumer confidence.
'Like all forms of connectivity, flying makes the world more prosperous,' IATA Director General Willie Walsh said at the group's annual meeting in New Delhi.
'That stands in contrast to isolationism, trade barriers and the fragmentation of the multilateral rules-based system. These destroy wealth and lower living standards. For the times we live in, this is an important message,' he said.
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Sweeping tariffs imposed by U.S. President Donald Trump have stoked fears of an economic slowdown and squeezed discretionary spending, prompting many consumers especially in the United States to delay or scale back travel plans.
They also threaten a decades-old pact between more than 30 countries to eliminate duties on aircraft and their parts.
While Walsh said there was no indication aircraft prices had increased due to tariffs, he said airlines would resist any attempt by aerospace manufacturers to raise prices and called for governments to 'keep aerospace out of trade wars.'
IATA represents some 300 airlines accounting for more than 80 per cent of global traffic.
On environmental sustainability, Walsh said progress was not what it should be at this point in time. He criticized energy firms for not producing enough sustainable aviation fuel (SAF), which is made from waste oil and biomass and costs more than conventional jet fuel.
IATA has increasingly been warning that airlines will struggle to meet their sustainability goals, but Walsh said the aviation industry was still aiming for net-zero emissions by 2050 based mainly on a gradual switch to SAF.
More people are flying than ever before after a post-pandemic passenger market recovery, but airline growth is being hampered by extended plane delivery delays and supply chain bottlenecks driving up maintenance and repair time.
Walsh called predictions of aircraft delivery delays throughout this decade 'off-the-chart unacceptable'. He said the airline industry was evaluating legal options over the delays, but it preferred to work with manufacturers collaboratively.
'The manufacturing sector is failing badly,' he said.
IATA said the number of deliveries scheduled for 2025 was 26 per cent less than what was promised a year ago, although at 1,692 this would be the highest number of new planes since 2018.
'Further downward revisions are likely, given that supply chain issues are expected to persist in 2025 and possibly to the end of the decade,' IATA said in the update to its industry outlook.
Tim Clark, president of the world's largest international airline, Dubai's Emirates, said on Sunday that the pandemic was no longer an acceptable excuse for delivery delays and challenged planemakers to take responsibility.
Similar frustration was voiced by Saudi budget carrier Flyadeal.
'Delays are becoming inexcusable. Transparency, to be frank, is lacking, and we're getting agitated. How else can we plan? I mean it is just going beyond a joke now,' Flyadeal CEO Steven Greenway told Reuters.
U.S. planemaker Boeing is trying to stabilize and ramp up production after a quality crisis and a labour strike slowed output last year.
Last week, sources told Reuters that Europe's Airbus has been warning airlines it faces another three years of delivery delays.
Despite the challenges, carriers are still looking to purchase more planes to ensure they can meet future travel demand.
Tata Group's Air India is in talks with Airbus and Boeing for a major new aircraft order including some 200 extra single-aisle planes, topping up a mammoth deal in 2023 as the former state carrier pursues a multibillion-dollar revamp, Reuters reported on Sunday.
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