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Trade conflict squeezes aviation industry

By Bo Leung in Geneva | China Daily | Updated: 2019-12-13 13:20
Workers walk next to the fuselage section of a plane at the Airbus A320 family final assembly line in Tianjin. [Photo/Agencies]

Slowing economic growth and the trade dispute between China and the United States have had an impact on the aviation industry this year, according to the International Air Transport Association.

The IATA forecasts that the industry will produce a profit of $29.3 billion next year, an improvement over this year's expected net profit of $25.9 billion.

The association, which represents around 290 airlines, gave its outlook on the industry during its annual Global Media Day briefings at its headquarters in Geneva.

The economic performance was weaker than expected in 2019, since the initial IATA outlook in June stood at $28 billion.

"Slowing economic growth, trade wars, geopolitical tensions and social unrest, plus continuing uncertainty over Brexit all came together to create a tougher than anticipated business environment for airlines," said Alexandre de Juniac, IATA's director-general and CEO.

"Yet the industry managed to achieve a decade in the black, as restructuring and cost-cutting continued to pay dividends," he added.

Looking ahead, total employment by airlines is expected to reach 2.95 million in 2020, a year-on-year increase of 1.6 percent. Passenger demand is expected to grow 4.1 percent in 2020, in line with 4.2 percent growth in 2019.

"The big question for 2020 is how capacity will develop, particularly when, as expected, the grounded 737 Max aircraft return to service and delayed deliveries arrive," de Juniac said.

Trade wars, he said, "produce no winners", adding that "while respecting the right of countries to protect their borders, we believe that greater connectivity makes our world a better place".

"It is part of the DNA of an industry with a mission to bring people closer as a global community," he said.

As the media spotlight turns to climate change as well as the aviation industry's impact on the environment, with people becoming more aware of carbon footprints, de Juniac emphasized that "flying is not the enemy, it's carbon".

He also said it is the industry's duty to ensure that the wider public has the facts to "make the right choices on air travel".

This includes committing to cut emissions to half by 2050, which would align aviation with the Paris agreement, and committing to carbon-neutral growth beginning in 2020.

Meanwhile, China has seen the biggest growth in air travel, growing 8 percent this year.

Brian Pearce, the IATA's chief economist, said, "The driving force behind domestic Chinese growth is that, although the Chinese economy is slowing, there has been a rebalancing by the authorities away from an export-driven economy toward a more demand-driven economy, which is positive for domestic aviation growth."

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