International Air Transport Association director general Willie Walsh on Wednesday accused what he called monopoly and quasi-monopoly suppliers—namely airport operators and air navigation service providers—of gouging airlines with higher prices during the Covid pandemic. The former International Airlines Group CEO called on regulators to intervene or risk deepening the financial burdens of an industry that has seen its debt increase by $220 billion during the pandemic.
“When you look at the airline industry, when they're faced with a situation where there's weaker demand, they reduce their prices so as to encourage more people to fly, to maximize their revenue, and maximize their cash,” said Walsh. “Monopoly suppliers take the view that when fewer people are flying, we just charge them more and they do that because they can…What we need is strong regulation.
“From my experience in the UK," Walsh continued, "the UK regulator was very soft when it came to regulating airport charges. We’ve seen that improve over the years, but these regulators have a responsibility to the consumer and they need to balance that responsibility with their responsibility to fairly regulate monopoly and quasi-monopoly entities.”
Walsh’s comments came as IATA unveiled a revised traffic forecast that projects revenue passenger kilometers (RPKs) recovering this year to only 43 percent of 2019 levels. Its previous forecast, issued in December, predicted RPKs would reach 51 percent of pre-pandemic levels. IATA chief economist Brian Pearce blamed the persistently strict travel restrictions imposed by governments and their consequences on international travel, in particular. Pearce also attributed an interruption early this year of rising RPK trends to the emergence of new Covid variants and a slow pace of vaccinations in emerging economies.
Although airlines in North America and China have seen “dramatic” reductions in losses recently due to the strength of their domestic markets, IATA now believes that it will take until next year before the industry as a whole begins to see breakeven results or profits.
Walsh called the Covid pandemic the greatest crisis the industry has ever faced, one that will prove deeper and longer-lasting than expected even as of late last year. He added that cost containment and reduction remain critical to survival, noting that the situation could have become much worse if not for the airlines’ aggressive fiscal response to the pandemic over the past year.
Walsh also affirmed Pearce’s projection that improving economic conditions portent a pent-up demand for travel. But unless airlines, government, and suppliers operate collaboratively, the crisis will persist longer than necessary, he added.
“Now is the time to ensure that everybody is working together to ensure that the industry can build up as quickly as possible and get people back flying again, get people enjoying the freedom that has been taken from them over the past 12, 14 months, so that we can get back to living our lives in as normal a way as possible,” said Walsh. “I firmly believe that this industry will recover and will recover strongly, and we will call out those who misbehave through this period, and we won’t be shy about identifying people who are trying to hurt the industry during this recovery phase.”