“Tariffs are a form of fragmentation dismantling the international trading system.” Economist Marie Owens Thomsen told the 81st International Air Transport Association (IATA) Annual General Meeting (AGM) and World Air Transport Summit (WATS), held at Bharat Mandapam in New Delhi
Ms Thomsen discussed global air transportation, noting the movement of five billion passengers and 69 million tonnes of cargo, which plays a crucial role in the global economy.
Concerns were raised about tariffs reaching their highest levels since the 1930s, contributing to fragmentation in trade and its detrimental effects on growth.
Despite economic challenges, a traffic growth forecast of 5.8% is anticipated for 2025, with airlines predicted to generate $979 billion in revenue and a net profit of $36 billion.
The European Union’s SAF blend mandate increases operational costs for airlines, leading to non-transparent pricing and limiting airlines’ ability to self-determine fuel procurement.
Addressing airlines’ need for higher margins, the speaker remarked on the resilience of the industry while acknowledging the necessity for rapid adaptation to ineffective policies.
Marie Owens Thomsen shared: “Lower oil prices help prop up activity, helps keep the blood flowing in our global arteries. This is a blue skies scenario for sure, but still we have to recognise that this is a low margin industry. Our whole industry makes in one single quarter that five large oil companies make in the whole year. If we want to be as uniquely robust and be able to withstand crises, then we need higher margins.”
