There are encouraging signs for passenger air travel.
In Europe, the summer season brought a substantial improvement, and in November 2021 we saw the long-awaited reopening of the US market. Bookings to the United States have surged and the news has been full of emotional reunions between loved ones who were separated for far too long.
There seems little doubt that the world is moving from a pandemic situation to an endemic situation. Strong vaccine rates are driving up population immunity and as hospitalization and death rates decline, this increases the pressure on governments to permit restriction-free travel for fully vaccinated people.
There remains, however, a lot of concern over vaccine equity. The relative lack of access to vaccines in poorer countries is inevitably going to hold back the reopening of these markets.
Another reason for the slower recovery is that governments have still not placed sufficient emphasis on global harmonization of travel rules. IATA’s passenger survey reveals considerable damage to customer confidence from the myriad measures governments have in place. Whether on vaccine recognition, rules on minors, testing regulations, red lists or many other issues, there is still far too much confusion.
Simple, harmonized rules are the key. And digital solutions are essential to reduce paperwork and prevent massive delays at the airport. There is a huge opportunity to fully digitize the airport experience, but we need to make sure that happens.
Despite the delayed recovery, we know that the long-term trajectory is for continual growth. That brings the environmental challenge into sharp relief. If we are to succeed in reaching our goal of net-zero carbon emissions by 2050, airlines, the wider value chain, and governments have to work together. We need effective policies to incentivize sustainable aviation fuels (SAF), airspace improvements, and other practical environmental measures. What we do not need is to be punished by ineffective green taxes that merely drain money that could be focused on environmental investment.
Airlines know that the cost of delivering net-zero over the next 29 years will be well into 13 figures. The better financial shape the industry is in, the faster it will be able to invest in SAF and other carbon-reduction options. Unfortunately, the fiscal challenges facing the industry seem to be getting worse not better.
In addition to worrying tax proposals, infrastructure costs are a huge concern. We recognize that airports and air navigation service providers (ANSPs) suffered a financial hit during the pandemic. But attempting to recoup these costs from airlines by hiking fees is unacceptable. ANSPs and airports have generated far in excess of their expected regulated returns during the boom years and investors must accept some short-term pain, as airlines did, for the COVID impact. But it is always too tempting for monopoly infrastructure providers to resist cashing in. So, regulators need to stand firm. Proposals for increases must be thrown out. If anything, fees should be cut, to help facilitate a recovery as rapidly as possible.
Regulators should also not be too hasty to end slot alleviation measures. Though some domestic markets may bounce back by the end of 2021, the rebuilding of the global network is still extremely fragile. And for long-haul markets the widely differing rates of recovery in different regions make it very challenging to relaunch capacity. A gradual, progressive return to the normal slot regulations is essential to preserve the international connectivity that has been the backbone of the economy for many years.
In all, airlines still face a confluence of serious challenges. When one considers the hurdles facing passengers, it is remarkable that traffic has rebounded as strongly as it has. It shows the deep desire—and necessity—many people have to fly. But we must be vigilant to guard against factors which could derail the recovery.