Trump & Brexit Era

Frequent Flyer Destinations - - CONTENTS -

With pro­tec­tion­ism on the rise in the U.S and Europe, what does the fu­ture hold for the air­line and avi­a­tion in­dus­try in the Trump and Brexit era?

Some early signs are omi­nous for both in­dus­tries which en­able and de­pend on glob­al­iza­tion. Fol­low­ing the US Pres­i­dent’s ex­ec­u­tive or­der bar­ring en­try to Amer­ica for cit­i­zens from seven pre­dom­i­nately Mus­lim coun­tries, there’s ev­i­dence that the coun­try’s tourism in­dus­try is ex­pe­ri­enc­ing a “Trump slump.” Data re­leased last month by travel search en­gines re­ported a 17 per­cent de­cline in flight search de­mand from in­ter­na­tional ori­gins to the US. The over­whelm­ing ma­jor­ity of coun­tries showed a dip in in­ter­est, with Rus­sia as the ex­cep­tion.

In an ad­dress at last week’s US Cham­ber of Com­merce Avi­a­tion Sum­mit in Washington DC, IATA’s re­cently ap­pointed CEO Alexan­dre de Ju­niac echoed the in­dus­try’s con­cern. “I be­lieve that avi­a­tion is the busi­ness of free­dom. Air travel lib­er­ates peo­ple to live bet­ter lives and makes our world a bet­ter place,” said de Ju­niac. “So we are deeply con­cerned with re­cent de­vel­op­ments that point to a fu­ture of re­stricted bor­ders and pro­tec­tion­ism. These deny the ben­e­fits of glob­al­iza­tion - a prod­uct made pos­si­ble by our in­dus­try.”

What does the im­me­di­ate fu­ture hold? The big three US air­lines ini­tially saw a sil­ver lin­ing in Trump’s pro­tec­tion­ist eco­nomic agenda, with op­por­tu­ni­ties to present cases against Gulf car­ri­ers and Nor­we­gian Air In­ter­na­tional’s for­eign air per­mit. How­ever, com­ments by White House press sec­re­tary Sean Spicer hint at dis­ap­point­ment for US air­lines re­gard­ing the lat­ter is­sue, af­ter he de­scribed the “huge eco­nomic ben­e­fit that lies in that deal right now.”

Af­ter the chaos, con­dem­na­tion and ju­di­cial back­lash that fol­lowed the Trump ad­min­is­tra­tion’s ini­tial travel ban, a re­vised or­der was is­sued on March 6. The new ver­sion keeps the long-term goal of re­strict­ing visas and refugee ad­mis­sions in place, but the tem­po­rary mea­sures are far more limited. While Air­lines for Amer­ica and IATA both is­sued state­ments wel­com­ing the ad­vanced no­tice and co­or­di­na­tion with the in­dus­try, shares in Delta Air Lines, Amer­i­can Air­lines and United Air­lines fell the most in five weeks. An­a­lysts ap­pear to share Buf­fett’s prog­no­sis, see­ing this as a short-term blip rather than a long-term worry.

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