China-US trade dispute impacts aviation industry

Airlines predict better new year following weaker than anticipated 2019 performance

Slowing economic growth and the trade dispute between China and the United States have impacted the aviation industry in 2019, according to global airlines body the International Air Transport Association, or IATA.

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

The IATA forecasts that the industry will produce a profit of $29.3 billion next year.

That is an improvement over 2019's expected net profit of $25.9 billion.

The economic performance was weaker than anticipated in 2019 as 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."

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

On economic growth, IATA said GDP is forecast to expand by 2.7 percent in 2020.

"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", noting 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.

With the media spotlight turning on climate change, and also the aviation industry's impact on the environment as people become more aware of their carbon footprints, he stressed, "flying is not the enemy, it's carbon".

He pointed out that it is the industry's duty to ensure the wider public have the facts to "make the right choices on air travel".

This includes committing to cut emissions to half by 2050 which aligns aviation with the Paris agreement and committing to carbon-neutral growth from 2020.

On the topic of air travel growth in emerging markets, IATA said there has been a rapid shift to the east.

Despite facing downward economic challenges, China has seen the biggest growth in air travel, growing 8 percent this year.

Brian Pearce, 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 towards a more demand-driven economy which is positive for domestic aviation growth."