Global Aviation Talk with IATA Director General Willie Walsh

IATA Director General Willie Walsh spoke on the issue. I caught up with Willy in Istanbul for an exclusive interview on the sidelines of IATA’s conference Wings of Change in Istanbul, where he discussed the way forward for the industry.

How is IATA doing two years after the pandemic?

We are doing well, the measures were initiated before I took over IATA. Although there is still much to be done, the efficiency of our organization has greatly improved. We have benefited from the industry recovery, our commercial operations are strong, we are seeing good demand for the products we offer such as training. IATA is doing well right now and I expect more new airline members as well. Our data and analytics that we provide are very good. IATA gained relevance during the pandemic.

You have to remember, airline CEOs are too busy running the day-to-day business and don’t have time to care about anything else. IATA has been very effective in keeping members up to date, but also in explaining to politicians what aviation is suffering at this time.

Will the importance of European hubs such as Frankfurt or London Heathrow shift more to the east such as Istanbul?

Yes, and airports and runways are being built in this part of the world.

If we look at Turkey, you can see how it values ​​aviation. This gives her a global connection. And not just because of tourism.

In Western Europe, many politicians see aviation as a liability

… Yes, but they take aviation for granted. They assume it’s always been there because Europe has had aviation for so long. And politicians believe, no matter what they do, aviation will always be there. But the reality is that aviation doesn’t always exist.

And especially for Europe, politicians have no world view! They really don’t understand what is going on with the airlines in the Middle East! I remember the speech I gave in 2007 when London Heathrow was the world leader in terms of international traffic. No one wanted to believe that Dubai would one day overtake Heathrow. And today?

IATA Director General Willie Walsh

If you look at how traffic has evolved around the world, you can see that there are natural opportunities for airlines in the Gulf. There is an argument for two centers in the Middle East, but not for three. So Dubai and Doha are reasonably distant geographically. But not to Abu Dhabi next to Dubai. We’ve seen it with London’s Gatwick and Heathrow. Two centers close to each other will not work.

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What is Europe doing wrong? Is it still possible to draw a curve for the importance of aviation?

Europe has already lost. Europe also had these opportunities, but now it is too late. A third runway will not be built at Heathrow. Too late for that too. Amsterdam Schiphol has reduced flights, Frankfurt has challenges with the use of their runways etc.

Here in Istanbul, it is a 24/7 operation. The connectivity that comes with the ability to fly 24/7 is important, especially when they offer global connecting flights.

Heathrow expansion
Heathrow expansion

Can you imagine the chaos in Amsterdam? Or Heathrow?

No, Amsterdam was a big surprise for me. I always thought it was a well-run airport, but very expensive. The management actually understands aviation well enough to run an efficient hub. Heathrow doesn’t surprise me because they have a management that doesn’t know how to run an airport. They know how to make money and make more money through environmental regulations.

But airport chaos is not as widespread in Europe. Spain’s airports have coped well and government support has done well to keep the workforce. So wherever governments help put people, that will be important again when we restart. At some airports, it’s even worse. Amsterdam and Heathrow, Dublin, Manchester or Gatwick for a short time, some recovered quickly.

Heathrow Airport has increased drone activity

The problem of airline consolidation in Europe. Will it speed up?

Airlines disappear either through bankruptcy or through mergers and acquisitions. Some weaker airlines may disappear. Now low volume time combined with high fuel costs. Not every airline survived the crisis. It also had to do with how they lived in the summer. Many have managed very well. What matters is how much money is earned in the next period. There is a risk, but not that much.

I think the chances of mergers and acquisitions are low because airlines still need to fix their finances. Everyone is very cautious about the risk, how they have faced the crisis and what they have yet to experience. There really needs to be a very good reason to use your precious capital to take over an airline. Such a deal should generate synergies very quickly. And usually, when there is such a possibility, the competition authorities don’t want it. So there are barriers to mergers and acquisitions in Europe.

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The issue of closed airspace over Russia…

It won’t be reopening anytime soon. This is a big challenge for everyone. It is shocking to see something like this at your doorstep in 2022. It has an effect. But so far it’s manageable. On the one hand, because traffic to Asia is still very weak.

Other influences are oil price and volatility. And if that had happened ten years ago, we wouldn’t have had these planes like the Boeing 787s or the Airbus A350s, without which long, non-stop detours wouldn’t be possible. At least you have the option to operate such a flight. It’s a different industry today. This remains a challenge for many airlines, but not as big because they can choose and focus on other areas. We can see that the capacity is still being sold.

ANA, JAL cancel or divert Europe flights to avoid Russian airspace
Airlines divert European flights to avoid Russian airspace

And when will the Asian market pick up again?

That has a big impact. Also, since Chinese airlines fly over Russian airspace, European airlines do not. So the question is whether it can survive in the competitive arena. This is challenging, it will hurt the industry in some areas, but not significantly. Not even financially. Except for a few, of course, for Finnair.

It will take a long time for international traffic to China to reach high levels again. Because many airlines say I am no longer willing to take the risk of using assets to fly to China when the Chinese lock down again overnight because of their zero covid strategy.

IATA Director General Willie Walsh

For many airlines in Europe, China is strategically important, but it is no longer economically important. Profitability on routes to China is marginal, especially outside major airports such as Beijing. Moving to second-tier cities in China is something to make money in the long run. But not immediately.

Emirates and United collaboration. Will we see more such new collaborations?

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I think it might be. Fortunately, the previous dispute between Gulf Airlines and USA is over. United CEO Scott Kirby is a businessman who isn’t afraid to make tough decisions. I think he will see opportunities for a long time. The fact that this is done encourages others to do the same.

Emirates Expo 2020 Dubai

Biggest challenge for IATA?

The environment is a big issue, and this is true wherever you look. We take it seriously. I am very satisfied that the industry is united on this issue and has long-term goals. And Sustainable Alternative Fuel (SAF) should be produced. I think we are on the right track. Airlines are committed to looking for opportunities.

Among other things, you are the CEO of British Airways or IAG. Do you miss this job?

A move from British Airways to IATA and CEO of the holding company International Airlines Group (IAG) also helped.

Running an airline is what I enjoy the most. On the operational side, the challenges. I really enjoyed it. Would it be fun for me to fly an airline today under these conditions? I think it’s not bad. But I retired as an airline boss.

How do you really see the Turkish aviation market? With all the inflation, recession…

Aviation in Turkey is recovering quickly. Here in Istanbul, East-meets-West is absolutely true, an iconic city. It is also surprising from an economic perspective given the country’s high inflation. There is no evidence that it has an effect. Turkey is also well placed in terms of international tourism.

Talk about the impact of recession on civil aviation….

About depression. I think it also has to do with how you look at it. The impact of recession on civil aviation is minimal. If you look at 2008 and 2009 (the financial crisis), 2009 saw an increase in the number of travelers worldwide during the deep recession. Airlines also generate revenue through fares. In a recession you may see an increase in passenger numbers, but pressure on revenues. We are now (November 2022) in a period where returns are very high. I don’t think flying is scary.

Is there a difference in general or even geographically?

It varies geographically. Economists say there is a risk of recession, but not much. But in aviation we face challenges every day.


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