Trump & Brexit Era
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.