TWTWTW 6 July to 10 July
A week when IATA’s survey agreed with Bill Gates, not Tim Clark in a battle to leave a legacy
CEOs like to go out with a big legacy-leaving bang. Monday saw a textbook example of this, with Tim Clark predicting Covid-19 will only cause a temporary blip in demand. “The thirst for knowledge, experience, business, leisure — that isn’t going to change,” Sir Tim told The Times. “Air travel has been growing at 7% a year on four billion passengers a year. Do the maths. In the next 10 years, the number will double to eight billion. Give it a year or two and travel will come roaring back.” The 70-year Brit, who will be stepping aside from his position at the helm of Emirates, also disagrees with the view of Bill Gates that the novel coronavirus will alter business travel significantly. According to the Microsoft founder, post-Corona-era business air travel will be less necessary due to the rise of technologies like Zoom, Teams and GoogleMeet. 2019 could have been the “peak year” in air travel. Nonsense, according to Clark. “We heard these kinds of predictions a lot, for example after the invention of the videoconference, after 9/11 and after the financial crisis. But even after that, air traffic grew.” Of course, with nearly $50 billion of assets, including 115 Airbus A380s, standing largely idle nobody would expect the soon-former Emirates president to admit that the “big bird” and the super-connector model he built might be crippled by a virus. Mind you, in 2015 Gates predicted the greatest risk of global catastrophe most likely to be a highly infectious virus. He also warned we were not ready for the next epidemic. Gates’s personal estimated net worth is $102 billion – slightly more than EK’s assumed aircraft worth— so perhaps should not be dismissed.
Another promising projection was made by EU Trade Commissioner Phil Hogan. The Irish Commissioner –who last month revealed he would not mind not switching jobs, and become the next head of the WTO, after being less than a year in his current job— pledged tough action in the ever-lasting Boeing-Airbus subsidy dispute between Brussels and Washington at the –yes– WTO. “I want to reassure people that we are ready to act decisively and strongly on the European Union side if we don’t get the type of outcome that we expect from the United States in relationship to finalising this 15-year-old dispute,” he told the European Parliament’s trade committee. Don’t expect a quick move from word to deed though. The WTO ruling on possible damages in the subsidy case against Boeing is delayed till September and the US continues to snub the Commission’s negotiating paper for an amicable settlement. In the meantime, let’s cross fingers the US Trade Representative does not realise new aircraft deliveries have virtually stopped due to Covid-19 and the 10% duty on the import of new Airbus jets is worthless. BTW, Hogan dropped his WTO ambition.
On Tuesday in a rare burst of introspection, IATA admitted passengers remain reluctant to fly due to concerns over the risks of contracting the novel coronavirus and that the industry will need to communicate the facts about cabin air quality and on-board social distancing “more effectively.” Just a thought, but how effective is it to demonstrate via Twitter and YouTube videos, opportunely supported by Airbus and Boeing, that modern aircraft’s HEPA filters capture well over 99.999% of germs, including the coronavirus, while some airlines demand economy passengers wear a face shield visor in addition to their face mask throughout the flight? How can passengers’ confidence be restored if an airline proclaims that “reducing the overall number of customers on every aircraft across the fleet is one of the most important steps we can take to ensure a safe experience for our customers and people” while industry bodies, including IATA and Airlines for Europe, insist that there is “no requirement for social distancing measures on board the aircraft from highly respected aviation authorities such as the US Federal Aviation Administration, EASA or ICAO.” The survey of leisure and business travellers in 11 countries, conducted in February, April and June on behalf of IATA, highlights the quandary and the thorny issue that low fares alone will not be enough to stimulate demand. “This crisis could have a very long shadow. Passengers are telling us that it will take time before they return to their old travel habits,” noted IATA’s DG, Alexander de Juniac. 84% of passengers — that is more than 8 out of 10— surveyed in June are afraid to travel until the virus is contained, up from 74% in February, Just 45% said that they will travel again in the first months after the pandemic subsides. In early April 61% said that they would. About two thirds are seeing less travel in their future —be it for vacation, visiting friends/relatives or business. And 84% of passengers said they would be concerned of possibly contracting the virus as the result of sitting next to someone who might be infected, 76% by touching hard surfaces on the plane such as seat or tray table, and 72% as the result from the cabin air quality.
With most – most, not all — of the EU’s internal borders open, German chancellor Angela Merkel travelled to Brussels on Wednesday for a pow-wow with the presidents of the three main EU institutions and to present the German Council Presidency priorities to the European Parliament. On top of the agenda, she told MEPs, “is to try to contain the pandemic and to overcome the consequences. Those are health-related, social, and economic consequences.” Nevertheless, she added, it is important not to lose sight of the other challenges, including climate change. There can only be a global solution to climate change if Europe acts as trailblazer in the field of climate action, she said. In other words: the German presidency is dedicated to move the Green Deal forward. This was music in the ears of the EP’s ENVI committee, whose members are irate about the change of the CORSIA baseline and steadfast in their goal to strengthen the bloc’s emissions trading system for airlines. ICYMI: the Commission opened an eight-week “feedback period” on new rules for the ETS and how to combine the scheme with CORSIA. A public consultation on the issue is “planned” for the third quarter.
On Thursday, the Commission sent out a communication to remind us what we almost and happily forgot: that it is time – again – to prepare for Brexit, or more accurately for the possibility of a no deal relationship between the EU and the UK when the transition period ends December 31. No deal: no worries; no change. The document does not hold anything new for aviation and aerospace. The readiness notices for air transport, aviation safety, aviation security, and REACH were published in spring.
Friday demonstrated that the Netherlands is more than a committed member of the so-called Frugal Four in discussions on the EU’s next long-term budget and the €750 billion Covid-19 economic recovery fund, but also a committed defender of human rights. The Dutch government is taking Russia before the European Court of Human Rights for its “role in the downing” of Malaysia Airlines flight MH17 in 2014. “Achieving justice for 298 victims of the downing of Flight MH17 is and will remain the government’s highest priority,” said foreign minister Stef Blok. “By taking this step today – bringing a case before the ECtHR and thus supporting the applications of the next of kin as much as we can – we are moving closer to this goal.”