UPDATE – Except for the resolution on its revised net-zero targets, the IATA Annual General Meeting (AGM) in Boston discussed a few other hot topics today that have caused irritation: Covid and costs. When Willie Walsh had a few things to say…

As the world slowly exits the Covid-pandemic and now enters an endemic, as Director-General Walsh called the new situation, the airline industry still suffers from travel restrictions, outright border closures, quarantine measures, testing, and vaccination checks. The more people that are vaccinated, the more Covid-19 will likely become ‘another’ virus that won’t go away anymore.

Hence Walsh’s irritation that air passengers continue to be confronted with drastic checks and restrictions: “Travel restrictions bought governments time to respond in the early days of the pandemic. Nearly two years later, that rationale no longer exists. Covid-19 is present in all parts of the world. And there is little evidence to support ongoing border restrictions and the economic havoc they create,” said Walsh in his speech.

The IATA boss in particular slammed the uncoordinated and diverse policies that countries and continents continue to use when it comes to checking air passengers for Covid. Walsh referred to the 24 different risk-assessments list, the inconsistent recognition of the World Health Organization (WHO) vaccine list, and the lack of consistency on vaccine validity or testing windows. Testing itself hasn’t contributed to higher Covid risks, said Walsh, referring to a UK survey in which only one percent of 4.2 air travelers that entered the UK tested positive.

IATA welcomed that more and more countries are adopting a risked-based and scientific approach to travel restrictions, something that the Association has called for on many occasions. “The EU took the decision to open for vaccinated travelers, Canada followed, the US and UK have announced similar measures. Singapore has vaccinated travel corridors, and even Australia, which has some of the most severe restrictions of the freedom of its people, will begin reopening its borders based on vaccination from next month.”

Re-open borders on five principles

That’s why IATA calls on governments to re-open borders based on five principles: vaccination should be available to all as quickly as possible, vaccinated travelers should not face any barriers to travel, testing should enable those without access to vaccines to travel without quarantine, antigen tests are the key to cost-effective and convenient testing regimes, and governments should pay for testing, so it does not become an economic barrier to travel. Digital documents like the EU Covid certificate or IATA’s Travel Pass will be required to prevent people from showing up with loads of paperwork, resulting in chaos at airports. After extensive testing, Travel Pass will enter regular operations.

IATA calls it ‘outrageous’ that London Heathrow proposes to pass on losses and increase charges by 90 percent for 2022. (Heathrow)

‘Passing on airport losses is outraging’

The other point that Walsh raised in his speech was cost. Or better: the unacceptability of charging the airline sector for the losses that airports and air navigation service providers (ANSP’s) suffered in 2020 and earlier this year. While airlines were forced to drastically cut costs and their workforce, received $243 billion in state aid of which $81 billion was for payroll support and of which $110 billion need to be paid back that in most cases burdened balance sheets and increased debts, many airports and service providers failed to take action, IATA notes.

On the contrary. “Some airports and ANSP’s are seeking to shore off their finances by recovering lost revenue from their airline customers. Some of our so-called partners want to recover the money that airlines couldn’t spend with them during the crisis.” Walsh cites the 30 to 42 percent increase in charges that ANSP’s in Canada, Ethiopia, and Europe will implement in 2022. Or the 31 percent by airports in South Africa, 40 percent by Amsterdam Schiphol, and London Heathrow “goes off the chart” with a proposed 90 percent increase next year. “Let me remind you of what Heathrow said just a few months ago and I quote: ‘We will continue to work closely with airlines on the impact of Covid-19, listening and responding to their needs and priorities for the months and years ahead.’ Are you kidding me?”

“Do they honestly expect us to believe that a 90 percent increase in charges is going to help the airline industry? We all want to put Covid behind us, but placing the financial burden of a crisis of apocalyptic proportions on the back of your customers, just because you can, is a commercial strategy that only a monopoly supplier could dream of.”

The bill to airlines has added up to $2.3 billion. “Outrageous. It needs to stop. Can you imagine airlines doing the same that we charge you because you didn’t fly last year? You would laugh us out of court.”

IATA calls on the airports and service partners to take responsibility. Or seek other ways to cover their losses. In the case of Amsterdam Schiphol, where the proposed forty percent increase has caused a stir with airlines serving the airport, Walsh said in the press conference: “It is owned by the government. In the same way airlines go to their shareholders to raise additional equity or the debt market to raise debt, airports should be required to do the same.”

ACI disappointed with IATA

In response to Walsh’s remarks, Director-General Luis Felipe de Oliveira of the Airports Council International (ACI World) said he is disappointed about them. 

Claims made about the airport industry are out of context and don’t reflect the efforts made by airports to support the aviation ecosystem during the pandemic. Airports have also experienced enormous financial stress and had to make drastic cuts to keep afloat. And in many jurisdictions, airports did not receive the same level of support compared to air carriers. To keep facilities running and safe to operate cargo and humanitarian flights during the pandemic, for example, airports incurred large costs. Fundamentally, airports will always remain infrastructure-intensive businesses—this translates into a high ratio of fixed costs.”

ACI World adds that seventy percent of the airports introduced incentives or discounts and deferred certain charges against airlines. It refers to IATA’s own data, which shows that “an analysis of charges, which contain both air traffic control and  airport charges, shows that these charges are only approximately five percent of airline cost items in 2020.”

 

(In a separate story tomorrow, we look at how costs have increased in Ethiopia)

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