Airlines warn against trade war
India draws flak for taxing int’l air tickets
sydney — Trade wars and protectionism are key risk factors to airline profits already weakened by rising oil prices, the International Air Transport Association said on Monday.
The warning came at the annual meeting of global airlines in Sydney, where it was revealed that 2018’s collective net profit was forecast to be $33.8 billion, down from an outlook of $38.4 billion released in December.
The lower figure, while still considered healthy for the sector, reflected the impact of soaring oil prices which have hit 3.5-year highs following the US pullout from the Iran nuclear deal and unrest in Venezuela.
IATA chief executive Alexandre de Juniac said airlines had so far faced no “significant decline” in passenger or cargo traffic, but warned that both would suffer if trade tensions continued.
“Generally, we think... that all these barriers to trade are bad news from an industry standpoint,” de Juniac told reporters.
Investors have been rattled by fears of conflict between some of the world’s biggest economies after US President Donald Trump imposed stiff tariffs on steel and aluminium from Europe, Mexico and Canada, sparking counter-measures from major allies.
Other key concerns raised by IATA include the US withdrawal from the Iran deal and uncertainty about the impact of Brexit.
Qantas chief executive Alan
all these barriers to trade are bad news from an industry standpoint Alexandre de Juniac,
IATA chief executive
Joyce said the Australian carrier was keeping a “watchful eye” on global developments, adding that the travel sector had been supported by increased trade.
“We have a number of free trade agreements between Australia and a number of countries in the region and we’ve seen a significant boost in freight... and travel as a consequence of that,” Joyce said.
IATA — which represents 280 airlines that make up 83 per cent of global air traffic — said the sector had experienced nine years of gains, although operating profits have been trending slowly lower since early 2016 thanks to rising costs.
“2018 is a tougher year but the airlines have done a good job of managing the changing environment,” de Juniac said. “This is a resilient industry that has been through almost two decades of significant and dramatic changes.”
Among the regions, North American airlines were expected to record a net profit of $15 billion this year, representing 44 per cent of the global total. European and Asia-Pacific carriers are tipped to report their second-highest ever net profits of $8.6 billion and $10.1 billion, representatively.
Latin American and Middle East airlines were also set to see their profits grow in 2018 on the back of stronger commodity prices, but African carriers are forecast to record losses of $100 million, the same as last year. — AFP sydney — The International Air Transport Association (IATA) castigated India for taxing international tickets.
“We must take governments to task. It is unacceptable that global standards are being ignored by the very governments that created them,” IATA’s director-general and CEO Alexandre de Juniac said.
Asserting that India was taxing international tickets in contravention of the resolutions of the UN body International Civil Aviation Organisation (ICAO), de Juniac said: “India helped develop ICAO resolutions prohibiting tax on international tickets.”
“Yet it persists in taxing international travel,” he said, apparently referring to the imposition of Goods and Services Tax and enhancement of its rates on international air tickets, especially business class.
The Indian government had announced the implementation of the GST from July 1, 2017. The tax covers airline products and services including tickets, ancillary, change, refund and other products and fees. De Juniac was presenting a report on the air transport industry at the opening session of the 74th IATA Annual General Meeting and World Air Transport Summit.