UNWTO | 19 September 2023 International tourism has continued to recover from the worst crisis in its history as arrival numbers reached 84% of pre-pandemic levels between January and July 2023, according to the latest data from UNWTO. The Middle East, Europe and Africa lead the global sector's rebound. Tourism on Track for Full Recovery Tourism demand continues to show remarkable resilience and sustained recovery, even in the face of economic and geopolitical challenges. The new issue of the UNWTO World Tourism Barometer tracks the sector's recovery over the course of 2023 up to the end of July. The UNWTO Barometer shows:
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IATA | Geneva | September 6 2023 Geneva - The International Air Transport Association (IATA) announced that the post-COVID recovery momentum continued in July for passenger markets. Total traffic in July 2023 (measured in revenue passenger kilometers or RPKs) rose 26.2% compared to July 2022. Globally, traffic is now at 95.6% of pre-COVID levels. Domestic traffic for July rose 21.5% versus July 2022 and was 8.3% above the July 2019 results. July RPKs are the highest ever recorded, strongly supported by surging demand in the China domestic market. International traffic climbed 29.6% compared to the same month a year ago with all markets showing robust growth. International RPKs reached 88.7% of July 2019 levels. The passenger load factor (PLF) for the industry reached 85.7% which is the highest monthly international PLF ever recorded. “Planes were full during July as people continue to travel in ever greater numbers. Importantly, forward ticket sales indicate that traveler confidence remains high. And there is every reason to be optimistic about the continuing recovery,” said Willie Walsh, IATA’s Director General. Air Passenger Market in Detail International Passenger Markets Asia-Pacific airlines saw a 105.8% increase in July 2023 traffic compared to July 2022, continuing to lead the regions. Capacity climbed 96.2% and the load factor increased by 3.9 percentage points to 84.5%. European carriers’ July traffic rose 13.8% versus July 2022. Capacity increased 13.6%, and load factor edged up 0.1 percentage points to 87.0%. Middle Eastern airlines posted a 22.6% increase in July traffic compared to a year ago. Capacity rose 22.1% and load factor climbed 0.3 percentage points to 82.6%. North American carriers had a 17.7% traffic rise in July 2023 versus the 2022 period. Capacity increased 17.2%, and load factor improved 0.3 percentage points to 90.3%, which was the highest among the regions for a second consecutive month. Latin American airlines’ traffic rose 25.3% compared to the same month in 2022. July capacity climbed 21.2% and load factor rose 2.9 percentage points to 89.1%. African airlines saw a 25.6% traffic increase in July 2023 versus a year ago, the second highest percentage gain among the regions. July capacity was up 27.4% and load factor fell 1.0 percentage point to 73.9%, the lowest among the regions. For a second month in a row, Africa was the only region to see capacity growth outrun traffic demand. Domestic Passenger Markets China’s domestic traffic jumped 71.9% in July compared to a year ago and is now 22.5% above July 2019 levels, which was the strongest gain against pre-pandemic levels among the domestic markets. US airlines’ domestic demand climbed 11.1% in July and was 3.0% above the July 2019 level. Air Passenger Market Overview The Bottom Line
“The Northern Hemisphere summer is living up to expectations for very strong traffic demand. While the industry was largely prepared to accommodate a return to pre-pandemic levels of operations, unfortunately, the same cannot be said for our infrastructure providers. Performance of some of the key air navigations services providers, for example, has been deeply disappointing for many reasons from insufficient staffing to the failure fiasco of NATS in the UK. These must be promptly corrected. Even more worrying, however, are political decisions by some governments—among them Mexico and the Netherlands—to impose capacity cuts at their major hubs that will most certainly destroy jobs and damage local and national economies. The numbers continue to tell us that people want and need air connectivity. That’s why governments should be working with us so that people can travel safely, sustainably and efficiently,” said Walsh. > Read the latest Passenger Market Analysis (pdf) Susan Laborde | Tech Writer | August 14, 2023
Tourism has been an essential revenue-generating sector, providing over 320 million jobs globally. According to statistics, the Tourism industry employs many women, representing 54% of the workforce. But the industry was greatly affected by the Covid-19 pandemic. Countries dependent on tourism felt the impact longer than other nations with diverse sources of revenue. In countries like Barbados, the pandemic halted the sector, significantly affecting the country’s income. This article provides information on the impact of Covid- 19 on the tourism industry. Let’s take a look. Global Impact in 2020 The pandemic affected the tourism industry negatively, and the unemployment rate increased.
The third-largest export industry in the world economy is tourism. Some nations’ gross domestic product is 20% of it. Millions of individuals in developed and developing economies are employed in this sector. The tourist sector employs one person for every ten employees. However, one of the Covid-19 epidemic areas was most badly damaged, hurting opportunities, public services, and lifestyles in various countries. Geneva - The International Air Transport Association (IATA) announced that the post-COVID recovery momentum continued in June for passenger markets. Total traffic in June 2023 (measured in revenue passenger kilometers or RPKs) rose 31.0% compared to June 2022. Globally, traffic is now at 94.2% of pre-COVID levels. For the first half of 2023, total traffic was up 47.2% compared to the year-ago period. Domestic traffic for June rose 27.2% compared to the same month a year ago and was 5.1% above the June 2019 results. Domestic demand was up 33.3% in the 2023 first half compared to a year ago. International traffic climbed 33.7% versus June 2022 with all markets showing robust growth. International RPKs reached 88.2% of June 2019 levels. First half 2023 international traffic was up 58.6% over the first half of 2022. “The northern summer travel season got off to a strong start in June with double-digit demand growth and average load factors topping 84%. Planes are full which is good news for airlines, local economies, and travel and tourism dependent jobs. All benefit from the industry’s ongoing recovery,” said Willie Walsh, IATA’s Director General. Air Passenger Market in Detail International Passenger Markets Asia-Pacific airlines had a 128.1% increase in June 2023 traffic compared to June 2022, easily the largest percentage gain among the regions. Capacity climbed 115.6% and the load factor increased by 4.6 percentage points to 82.9%. European carriers posted a 14.0% traffic rise versus June 2022. Capacity rose 12.6%, and load factor climbed 1.1 percentage points to 87.8%, which was the second highest among the regions. Middle Eastern airlines’ June traffic climbed 29.2% compared to June last year. Capacity rose 25.9% and load factor improved 2.0 percentage points to 79.8%. North American carriers saw traffic climb 23.3% in June 2023 versus the 2022 period. Capacity increased 19.5%, and load factor rose 2.7 percentage points to 90.2%, which was the highest among the regions. Latin American airlines had a 25.8% traffic increase compared to the same month in 2022. June capacity climbed 25.0% and load factor rose 0.6 percentage points to 84.8%. African airlines’ traffic rose 34.7% in June 2023 versus a year ago, the second highest percentage gain among the regions. June capacity was up 44.8% and load factor fell 5.1 percentage points to 68.1%, lowest among the regions. Africa was the only region to see a decline in the monthly international load factor compared to the year ago period. Domestic Passenger Markets Australia’s domestic traffic slipped 1.7% in June compared to a year ago. It was the only domestic market to see a year-over-year traffic decline in June, although traffic remained 3.9% above pre-pandemic levels. Indian airlines’ domestic demand climbed 14.8% in June and was 1.3% above the June 2019 level. Air Passenger Market Overview The Bottom Line “As strong as travel demand has been, arguably it could be even stronger. Demand is outrunning capacity growth. Well documented problems in the aviation supply chain mean that many airlines have not taken delivery of all the new, more environmentally friendly aircraft they had expected, while numerous aircraft are parked awaiting critical spare parts. And, for the fleet that is in service, some air navigation service providers (ANSPs) are failing to deliver the requisite capacity and resilience to meet travel demand. Delays and trimmed schedules are frustrating for both passengers and their airlines. Governments cannot continue to ignore the accountability of ANSPs in places where passenger rights regimes place the brunt of accountability on airlines,” said Walsh. TravelBoom | July 26, 2023
Study reveals customers are making up for lost time. MYRTLE BEACH, S.C., July 26, 2023 — TravelBoom, the leading data-driven digital marketing agency for hotels, resorts, and vacation rental companies, released its annual Leisure Travel Trends Study after recently surveying approximately 2,000 travelers in 2023. The findings uncover the influence of an ever-changing economy on travel choices, increases in online bookings, an increased frequency of vacations, and the most sought-after amenities when booking. The study explores the step-by-step process travelers undergo when navigating a selection of locations, planning, and booking a vacation. It encompasses the influence of social media on bookings and the changing expectations regarding the non-negotiables for holidays. TravelBoom’s 2023 Leisure Travel Trends Study offers valuable insights, such as: • Leisure travelers are changing their habits in light of the overall economy. Results show a staggering 3 out of 4 travelers making changes to their vacation planning due to inflation. • Travel is returning to pre-COVID numbers. COVID-19 is largely behind today’s travelers and has no impact or only a minor influence on travel decisions. • Reviews can easily disqualify a property, but reviews alone can’t entice a visitor to stay. This year, reviews came in last when looking at the most influential booking factors, with location and price coming in first. • A surprising leap is ahead for loyalty programs. Compared to 45% in 2022, 68% of travelers indicated loyalty programs influenced them in 2023. • Hotels could be considering whether to give up on social media marketing. Social media is shown to have very little ability to inspire the initial travel decision. However, we have uncovered several social media strategies that can be successful and drive revenue for hoteliers. “The data is clear; Covid is a concern of the past for today’s leisure travelers. However, a new “c” word has taken its place, “cost,” said Pete DiMaio, COO of TravelBoom. “The data shows significant leisure travel planning changes due to rising costs and economic uncertainty. The positive news is that travelers are still looking to get away, though it will differ from past years. This study has revealed insights into exactly what today’s independent hotelier should do to capitalize and maximize occupancy in a very uncertain time.” For full study click below IATA Reports Strong Air Travel Growth Continues in May as Load Factor Rises to 2019 Levels.7/14/2023 Geneva - The International Air Transport Association (IATA) released May 2023 traffic data showing continued strong growth in air travel demand. Total traffic in May 2023 (measured in revenue passenger kilometers or RPKs) rose 39.1% compared to May 2022. Globally, traffic is now at 96.1% of May 2019 (pre-pandemic) levels. Domestic traffic for May rose 36.4% compared to the year-ago period. Total May 2023 domestic traffic was 5.3% above the May 2019 level. This is the second month in a row domestic traffic has exceeded pre-pandemic levels. International traffic climbed 40.9% versus May 2022 with all markets recording strong growth, led once again by carriers in the Asia-Pacific region. International RPKs reached 90.8% of May 2019 levels, with Middle East and North American airlines exceeding pre-pandemic levels. The total industry load factor rose to 81.8%, led by North American carriers at 86.3%. “We saw more good news in May. Planes were full, with the average load factors reaching 81.8%. Domestic markets reported growth on pre-pandemic levels. And, heading into the busy Northern summer travel season, international demand reached 90.8% of pre-pandemic levels,” said Willie Walsh, IATA’s Director General. Air Passenger Market in Detail International Passenger Markets Asia-Pacific airlines had a 156.7% increase in May 2023 traffic compared to May 2022, maintaining the very positive momentum since the lifting of the remaining travel restrictions in the region earlier this year. Capacity rose 136.1% and the load factor increased 6.4 percentage points to 80.0%. European carriers posted a 19.8% traffic rise versus May 2022. Capacity climbed 14.2%, and the load factor rose 3.9 percentage points to 84.4%. Middle Eastern airlines saw a 30.8% traffic increase compared to May a year ago. Capacity climbed 25.0% and the load factor pushed up 3.6 percentage points to 80.2%. The region is leading the recovery with May traffic at 17.2% above 2019 levels. North American carriers’ traffic climbed 31.0% in May 2023 versus the 2022 period. Capacity increased 23.2%, and the load factor rose 5.1 percentage points to 85.1%, highest among the regions. Latin American airlines had a 26.3% traffic increase compared to the same month in 2022. May capacity climbed faster-- up 27.3% -- and the load factor slipped 0.7 percentage points to 83.8%. The region was the only one to see capacity growth exceed traffic growth for the month. African airlines’ traffic rose 45.2% in May 2023 versus a year ago. May capacity was up 44.2% and the load factor edged up 0.5 percentage points to 68.8%, the lowest among the regions. Domestic Passenger Markets Brazil’s domestic traffic grew 8.6% in May compared to a year ago, and is the latest domestic market to recover fully with traffic at 6.5% above pre-pandemic (May 2019) levels. Japan’s domestic traffic surged 39.0% in May compared to a year ago, the strongest result after China and at 99.8% of pre-pandemic levels. Air Passenger Market Overview - May 2023 The Bottom Line
“People need and love to fly. The strong demand for travel is one element supporting a return to profitability by airlines. In 2023 we expect airlines globally to post a $9.8 billion net profit. It’s an impressive number, particularly after huge pandemic losses. But a 1.2% average net profit margin is just $2.25 per departing passenger. As a return, that is not sustainable in the long-term. Moreover, it appears that, while the pandemic has changed many things in aviation, it has not righted aviation’s famously unbalanced value chain. The latest indication came last week as European airports announced a EUR 6.4 billion ($7 billion) collective profit in 2022. In comparison, IATA estimates that European airlines made a $4.1 billion profit for the same year. We don’t begrudge any business hard-earned profits. But this does raise an interesting question. Is airport economic regulation effectively defending the public interest when a monopoly supplier (airports) can generate seemingly much healthier returns than the competitive businesses (airlines) they supply? Governments should at least take a look”, said Walsh. > View the May Air Passenger Market Analysis (pdf) Sunny Forecast for Summer Travel: Nearly Half of All Americans Are Planning to Vacation This Season.7/7/2023 MMGY Travel Intelligence | July 06, 2023
Short-term trips, cannabis tourism and other trends stand out in latest MMGY Global Survey Building upon the significant gains from 2022, new research by MMGY Travel Intelligence indicates that the American tourism industry will experience another blockbuster summer in 2023. According to the latest edition of the research firm’s Portrait of American Travelers® study, more than three-quarters of U.S. adults plan to take a vacation in the next 12 months, with nearly half of all adults (48%) planning to travel this summer specifically. “Though certain segments continue to lag, including the meetings/conventions and corporate transient travel categories, American interest in travel as a whole remains very, very high,” said Chris Davidson, Executive Vice President of MMGY Travel Intelligence. The survey, which examines the behaviors and preferences of more than 4,500 U.S. adults on a quarterly basis, also found that most Americans now regard travel as a direct reflection of their self-identity. More than half of all survey respondents (51%) agreed with the notion that the places they visit say a lot about who they are. “This notion of self-expression through travel – or ‘identity travel’ – indicates that Americans, now more than ever, seem to be seeking out destinations and activities that best align with their unique ideals and values,” said Davidson. “As American travelers become more discerning with their dollar, marketers should take greater note of this changing mindset, working to clearly articulate and deliver on their brand values to attract those who see life through a similar lens.” Other key observations from the Portrait of American Travelers® “Summer Edition” follow.
About the 2023 Portrait of American Travelers® MMGY Global’s Portrait of American Travelers® study provides an in-depth examination of the impact of the current economic environment, prevailing social values, and emerging travel habits, preferences and intentions of Americans. Now in its 33rd year, it is widely regarded as a leading barometer of travel trends and an essential tool for both the development and evolution of brand and marketing strategy. The travel trend information presented in this “Summer Edition” report was obtained from interviews with 4,501 U.S. adults in April and May 2023 featuring data from four generations: Gen Zers (18–25), Millennials (26–41), Gen Xers (42–57) and Boomers (58–76). The Silent/GI generation (77+) was also surveyed, but results are not broken out for this specific generation due to a small respondent sample size. This is the second of four quarterly reports to be released this year. By Allison Schaefers | Hawaii Star Advertiser | June 13, 2023
While overall satisfaction among Hawaii visitors is high, fewer visitors from North America say they’re “very likely” to return in the next five years, according to the results of a state-commissioned survey. The latest Visitor Satisfaction and Activity Survey ranks the cost of a trip to Hawaii as the top reason cited among visitors from the U.S. West, U.S. East and Canada who say they are not very likely to return in the next five years. The desire to go someplace new as well as the perception that Hawaii was too expensive, and a poor value were among the top factors not to return to Hawaii in all North American source markets that were part of the 2023 first-quarter survey. Some visitors also mentioned a perception that Hawaii was overcrowded or too commercialized. The state Department of Business, Economic Development and Tourism hired Anthology Research to conduct the survey, using data from Jan. 12 to April 11. The firm surveyed 4,742 visitors from the U.S., Canada, Oceania, South Korea, China and Japan. More than 60% of visitors surveyed from all markets indicated they were very likely to return to Hawaii in the next five years. However, the percentage who are very likely to return is still falling in some key Hawaii markets. The percentage of visitors from the U.S. West — Hawaii’s top source of visitors — who said that they would be very likely to return in the next five years fell to 81.2%, a 1 percentage-point drop from the survey’s results in the first quarter of 2022. It marked the lowest score of U.S. visitors who were very likely to return since at least 2016 Among U.S. East visitors, 65.2% of survey respondents said they would be very likely to return to Hawaii in the next five years. The percentage was down 1.4 percentage points from 66.6% in the first quarter of 2022, and was the lowest percentage of those very likely to return since the first quarter of 2020, which included the start of the pandemic. Visitors from Canada, which has been Hawaii’s top international market since the pandemic, saw a greater drop than domestic visitors. The percentage of visitors from Canada who said they would be likely to return in the next five years fell to 66.4%, an 8.3 percentage- point drop from the first quarter of 2022. There weren’t similar year-over-year VSAT comparisons for Japan, Oceania, South Korea and China. At the time of the survey, most international visitor markets had relaxed travel restrictions and quarantine requirements; however, there continued to be limited direct flights to Hawaii from Japan, South Korea and Oceania. There have been no direct flights between Hawaii and China since February 2020. Given Hawaii’s dependence on domestic visitors and repeat travelers, such a decrease in North American travelers returning to Hawaii in five years could strain the state’s tourism performance. DBEDT statistics show that more than 1.97 million visitors arrived in Hawaii by air during this year’s first quarter, with those on domestic flights accounting for roughly 93% of Hawaii’s total visitors by air. And as many as 72.6% of the first-quarter visitor arrivals to Hawaii were repeat travelers. Jerry Gibson, president of the Hawaii Hotel Alliance, said repeat guests “are the best guests for Hawaii because they are like an apostle to us. They go out and talk to 10 different people and say they love the destination. It’s really important that we concentrate on repeat guests and many hotels have repeat guest programs.” The survey results come as Hawaii’s visitor industry continues to struggle to regain visitors from Japan, and arrivals from the U.S. are expected to soften. Though international markets outside of Japan have had a stronger recovery, they comprise far fewer visitor arrivals. Gibson said hotels statewide are still seeing a “fairly slow pickup” for July and August, which are typically peak travel months for Hawaii. Still, there were many positive developments in the VSAT survey, which Hawaii Tourism Authority President and CEO John De Fries attributed to the hospitality of local residents statewide. De Fries said in a statement, “Clearly, the overriding message that is reflected in these survey results is that the people of Hawaii, from our tourism professionals to the kamaaina who engage with visitors on a daily basis, are the reasons why Hawaii continues to be such a favorite destination for travelers from around the world.” Despite some softening in the percentage of repeat visitors who would be very likely to return to Hawaii in the next five years, overall visitors gave Hawaii high marks. Among survey respondents, 88.1% of U.S. West visitors; 88.8% of U.S. East visitors; 85.3% of visitors from Canada; 78.4% of visitors from Japan; 73.6% of visitors from Oceania; and 85.5% of visitors from South Korea rated their most recent trip to Hawaii as “excellent.” Nine in 10 visitors surveyed from each major market said that Hawaii exceeded or met their expectations. Hawaii “exceeded expectations” for 41.4 % of visitors from the U.S. West; 52.6 % from the U.S. East; 46.4 % from Japan; 38.1 % from Canada; 38.6 % from Oceania; and 59.2 % from South Korea. Chris Kam, president and COO of Honolulu-based Omnitrak, theorizes that months of inflation and higher Hawaii hotel costs have led to higher guest expectations. “Basically people were willing to spend up for a while, but as they continue to spend increasing amounts of money to come and visit I think their expectations also went up,” Kam said. “If our ability to meet their expectations did not rise as much or worse if some of our product got degraded during the pandemic, then that’s a model that we don’t want to use. At the same time you are raising your prices, you also should be elevating your product experience.” Gibson said Hawaii hotels are prioritizing guest satisfaction, especially after the disruption of the pandemic. “Many of the resorts are redoing their hotels and redoing capital items to make the physical asset even better,” Gibson said, adding that there also is additional emphasis on telling the cultural stories of each property and prioritizing sustainability, including using locally sourced vegetables and fruits. Gibson said the additional investment is good for visitors, but also for employees and the community. Kam said there is a direct correlation between visitor satisfaction and resident sentiment. “You have probably heard the saying, ‘It’s a nice place to visit, but I wouldn’t want to live there.’ We turned that around to ‘If it’s a nice place to live, people will want to visit,’” Kam said. “You have got to get quality of life of the residents in balance with the satisfaction of visitors in order to have a sustainable and regenerative model for tourism.” Kam said Omnitrak is rolling out new national research on resident sentiment, which surveys the results of more than 144,000 Americans across the country, at the Travel and Tourism Research Association Annual International Conference, June 13-15, in St. Louis. He said preliminary results show that Hawaii is toward the center of the national index for resident sentiment. Kam said there’s room to improve resident sentiment in Hawaii, but “we’re not as bad as we think.” TOP REASONS NOT TO RETURN From the U.S. West: 1. Too expensive 2. Poor value 3. Want to go someplace new 4. Too crowded/congested 5. Too commercialized/overdeveloped From the U.S. East: 1. Too expensive 2. Flight too long 3. Want to go someplace new 4. Poor value 5. Five years is too soon to revisit From Canada: 1. Too expensive 2. Want to go someplace new 3. Poor value 4. Flight too long 5. Too commercialized/overdeveloped Source: Department of Business, Economic Development and Tourism, Hawaii Tourism Authority Geneva - The International Air Transport Association (IATA) announced continued strong passenger traffic demand in April. Total traffic in April 2023 (measured in revenue passenger kilometers or RPKs) rose 45.8% compared to April 2022. Globally, traffic is now at 90.5% of pre-Covid levels. At 81.3%, industry load factor was only 1.8 percentage points below pre-pandemic level. Domestic traffic for April rose 42.6% compared to the year-ago period and has now fully recovered, posting a 2.9% increase over the April 2019 results. International traffic climbed 48.0% versus April 2022 with all markets recording healthy growth, with carriers in the Asia-Pacific region continuing to lead the recovery. International RPKs reached 83.6% of April 2019 levels. “April continued the strong traffic trend we saw in the 2023 first quarter. The easing of inflation and rising consumer confidence in most OECD countries combined with declining jet fuel prices, suggests sustained strong air travel demand and moderating cost pressures,” said Willie Walsh, IATA’s Director General. Air Passenger Market in Detail International Passenger Markets Asia-Pacific airlines saw a 192.7% increase in April 2023 traffic compared to April 2022. Capacity climbed 145.3% and the load factor increased by 13.2 percentage points to 81.6%. European carriers had a 22.6% traffic rise versus April 2022. Capacity rose 16.0%, and load factor climbed 4.5 percentage points to 83.3%, which was the second highest among the regions. Middle Eastern airlines posted a 38.0% traffic increase compared to April a year ago. Capacity climbed 27.8% and load factor rose 5.6 percentage points to 76.2%. North American carriers’ traffic climbed 34.8% in April 2023 versus the 2022 period. Capacity increased 26.5%, and load factor rose 5.2 percentage points to 83.8%, which was the highest among the regions. North American international traffic is now fully recovered, with RPKs 0.4% above April 2019 levels. Latin American airlines saw a 25.8% traffic increase compared to the same month in 2022. April capacity climbed 26.4% and load factor slipped 0.4 percentage points to 83.1%. African airlines’ traffic rose 53.5% in April 2023 versus a year ago, the second highest among the regions. April capacity was up 50.0% and load factor climbed 1.6 percentage points to 69.8%, lowest among the regions. Domestic Passenger Markets China’s domestic traffic rose 536.2% in April compared to a year ago and surpassing the April 2019 levels by 6.0%. US airlines’ domestic demand climbed 5.5% in April and was 3.3% above the April 2019 levels. The Bottom Line
“Heading into the Northern Hemisphere peak travel season, aircraft and airports are full of people eager to make use of their travel freedoms. Airlines are working hard to accommodate them with a smooth travel experience despite continuing supply chain shortages and other operational challenges. Sadly, some governments appear more keen on punitive regulation than on doing their part to enable hassle-free travel. The Dutch Government’s high-handed effort to slash capacity at Schiphol airport is a prime example. And then we have a focus on EU-style passenger rights regulation that is spreading like a contagion. Proponents of this approach miss a key fact. EU 261 has not led to a reduction in delays. That’s because penalizing airlines raises airline costs but does not address delays caused by factors over which airlines have no control, such as inefficient air traffic management or staffing shortages at air navigation service providers. The single best thing that Europe could do to improve the travel experience is deliver the Single European Sky. As for other governments contemplating passenger rights regulations, avoiding a repeat of Europe’s mistake would be a helpful starting point. Passengers will “bear the cost” of the airline industry’s transition to net zero through higher airfares, the head of the International Air Transport Association (IATA) has warned.
Addressing the Sustainable Aerospace Together Forum, hosted in Seattle by Boeing and FT Live earlier this month, IATA director general Willie Walsh pulled no punches when spelling out the enormous cost of decarbonizing aviation and how it will be funded. IATA’s member airlines agreed in October 2021 to commit to net zero carbon emissions by 2050. The trade body sees sustainable aviation fuel (SAF) as potentially representing 65% of the abatement needed to reach that target. However, these fuels are three to five times more expensive than kerosene, and a massive amount of investment is needed to vastly scale up production. “Ultimately, our customers are going to bear the cost of this transition,” says Walsh. “Anybody who says that the cost of transitioning to net zero is going to be low or unnoticeable, I’m afraid, is fooling themselves. This will represent a significant challenge and mean that passengers will have to pay higher fares.” He adds that “we need to be honest” with customers about the “significant” cost of transitioning to net zero. Airlines “are not in a financial position to absorb that cost”, says Walsh, therefore, “it will have to be passed on to consumers”. It is “absolutely crucial”, in Walsh’s view, that “everybody recognizes they have a role to play” in the transition. “It’s not just about airlines,” he says. “We need the OEMs to play their part, we need governments to recognize that they have a significant role to play. Regulators need to understand the challenge and be ready to support the transition to net zero. We need investment, and that means we’re going to have to access finance.” Some airlines are already being open with passengers about the increased cost of SAF, and have begun adding it to their ticket prices. KLM, for instance, recently doubled the mandatory sustainable aviation fuel surcharge introduced last year on all flight tickets from Amsterdam. The Dutch carrier now adds a surcharge of between €2 and €24 ($2.14-$25.72) to tickets from Amsterdam, to help fund the use of a 1% SAF blend on all Schiphol-departing flights. The surcharge runs alongside a voluntary SAF contribution program, although the airline has admitted that take-up for this is low. Jonathon Counsell, group head of sustainability at British Airways parent company IAG, also points to low take-up for voluntary schemes. “We have voluntary mechanisms for our customers to reduce their emissions. The uptake is relatively low but they are a good consumer engagement piece,” Counsell told attendees at the Sustainable Aerospace Together Forum. While corporate customers have shown “a lot of interest” in voluntarily paying extra to reduce their own Scope 3 carbon emissions, he notes that, “ultimately, we’re not going to solve the problem through voluntary mechanisms”. Anecdotally, Counsell recalls a recent conversation with a customer in which, he claims, the customer said: “Don’t give me the choice, it’s too complicated. Just include it in the ticket price.” Not all airlines agree, however, that the cost of net zero should automatically translate to higher airfares. Diana Birkett Rakow, senior vice president public affairs and sustainability at Alaska Airlines, says the US carrier is “really wrestling with, ‘how do we make sure this is a transition that’s managed economically so that it doesn’t put air travel and the economic opportunity of air travel out of reach for more people?'”. This question, says Rakow, is “going to be a conversation that we will all grapple with over the next couple of decades, but one that’s important not to lose sight of”. She adds: “On all fronts, education of consumers is probably the place to focus on more than what’s the cost right now – both because it’s important to supporting the transition, but it’s also important for the political will to enact the types of policies and understand what it takes to get through this transition. “So, I would encourage us to think about it that way, rather than who pays.” |
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics. Archives
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