Global airlines issue warning over trade tensions

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Global airlines and aviation executives warned on Sunday about growing international trade tensions, saying they could damage the airline industry and the world economy.

The Trump administration has renewed tariff threats against China, while key US allies Canada, Mexico and the European Union have been hit with duties on steel and aluminium.

Alexandre de Juniac, director general of the International Air Transport Association (IATA), which represents most of the world’s main carriers, said he was very worried, highlighting that the industry relied on open borders for the movement of goods and people.

“Any measures that reduce trade and probably consequently limit passenger travel are bad news, not only for the global economy, but it’s very bad news for this industry,” he told Reuters on the sidelines of IATA’s annual meeting in Sydney.

The uncertainty could dampen demand for the business travel, a key driver of profits for the airline industry, Gloria Guevara Manzo, chief executive of the World Travel and Tourism Council (WTTC).

“(Business travelers) need to wait and see what happens - will their business be impacted, do they need to diversify, go some other places. War in trade is not good,” she said.

Planemakers Boeing and Airbus echoed that the uncertainty was negative for business and highlighted that free trade helped to drive economic growth, creating jobs.

“It brings down costs to consumers and creates jobs both with our partners as well as at our company,” Boeing Commercial Airplanes marketing vice president Randy Tinseth told Reuters.

Airbus said the aviation industry existed because people were able to travel freely and markets were open.

“We are in a worldwide industry here. We see it in a negative way because it is putting borders and putting
constraints for everybody, including our customers,” Airbus Chief Commercial Officer Eric Schulz told reporters.

Asked about the impact of tariffs on its business, Boeing’s Tinseth said it would not have a material impact on the company’s financials.

“For example, I think 90 percent of the aluminium we acquire comes domestically,” he said.

Airbus’ Schulz said it was too early to give an answer as to the direct financial impact on the European company.

Guevara Manzo also said the WTTC is concerned about tariffs because it means less money for businesses to invest in critical infrastructure, such as ports, airports and hotels. “Steel for hotels is like flour for bakeries,” she said.

The annual IATA meeting brings together about 130 CEOs and 1,000 delegates.

This year in Sydney, concerns that a three-year run of unusually high returns might end due to rising fuel, labor and infrastructure costs are in the spotlight.

“The more you restrict trade, or migration, or travel, the less prosperity you get for this industry,” de Juniac added.

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