Airlines gather at IATA meeting
Leading executives to assemble in person for first time in over two years
Top airline executives from around the world will assemble tomorrow for their first face-to-face gathering in more than two years even as a long-anticipated rebound in global corporate travel remains a distant prospect.
The International Air Transport Association’s annual general meeting, which was held virtually in 2020, will open tomorrow in Boston. Airline leaders are intent on showing up for in-person elbow bumps to demonstrate it’s safe to fly for business again. It’s part of an effort to revive a highly profitable segment of the industry beset by uncertainty over shifting return-to-office plans.
Similar conferences in other industries have been cancelled or relegated to webcasts. But not for a business that’s all about getting there.
“We believe that it is vital to do all we can to meet as an industry faceto-face,” Alexandre de Juniac, IATA’s former director-general, said earlier this year in an announcement postponing the event to October from June. “Doing so will affirm that airlines can safely connect the world, demonstrate our industry’s resilience, and confirm the inestimable value of in-person meetings.”
US airlines will be well represented, with chief executives from American Airlines Group Inc, Delta Air Lines Inc and United Airlines Holdings Inc joining JetBlue Airways Corp’s Robin Hayes, who is chairman of IATA’s board of governors this year. Many European executives also will attend, including Luis Gallego, chief executive of British Airways parent International Consolidated Airlines Group SA, Carsten Spohr of Germany’s Deutsche Lufthansa AG and Pieter Elbers of KLM. Boeing Co and Airbus SE officials are scheduled as speakers.
Passenger traffic has begun to creep back for transatlantic routes since the US said Sept 20 it will lift travel restrictions on visitors from the UK, Europe and some other countries starting in November. Forecasts vary for when demand will return fully to pre-pandemic levels. Some expect a
transpacific recovery could come as late as 2025, a year or more behind a transatlantic one.
While the executives flocking to Boston aim to signal business travel is starting to normalize, the number of attendees at the Oct 3-5 event is expected to be about one-third fewer than in 2019, mainly due to tight travel restrictions in the Asia-Pacific region. Cathay Pacific Airways chairman Patrick Healy is among those who won’t show up, nor will the chief executives of Japan’s two largest carriers.
IATA, which represents almost 300 airlines accounting for 82% of global air traffic, is expected to update its forecast
of industry red ink at the conference. In April, the trade group estimated carriers worldwide will lose about US$48 billion in 2021 on top of the $126 billion loss posted last year at the height of the pandemic.
North Atlantic corporate travel traditionally has been a cash cow for the three largest US airlines and their revenue-sharing European alliance partners. Together, they control close to 75% of aircraft seats in the transatlantic market, which accounts for the bulk of their most profitable routes. For now, airlines will keep capacity tight and cater to less-lucrative vacationers.
“Leisure is going to lead the recovery on the international side and then comes corporate,” said Conor Cunningham, an MKM Partners analyst.
Traffic from the US accounted for about 16% of passenger revenue for European carriers in 2019, the largest share, according to a Sept 24 report from IATA. Some 31% of revenue for US carriers was earned from European travelers that year. In the second quarter of 2021, the most recent data available, passenger revenue from transatlantic routes was 66% below the same period in 2019 for European airlines, and lagged by 49% for North American carriers.
Airlines were dealt a blow as many US employers delayed return-to-office plans to late this year or early 2022 amid the spread of the delta variant of Covid-19. Wells Fargo & Co now plans to start bringing workers back on Jan 10. BlackRock Inc, Facebook Inc and Microsoft Corp also have delayed return-to-office plans.
“The regular business travel we think of as travel for meetings and sales development and working together — all of that won’t come back in force until people are regularly in their offices in force” on both sides of the Atlantic, said Samuel Engel, head of the aviation group at consultant ICF.