A trusted source of Asia-Pacific commercial aviation news and analysis
Cover Story
Risk averse governments holding back airline recovery
When Willie Walsh took charge of the International Air Transport Association earlier this year, airlines worldwide were in the midst of their worst crisis in the history of aviation. The former airline boss is determined to see the industry through the pandemic, but he has a special message for Asia-Pacific governments, reports associate editor and chief correspondent, Tom Ballantyne.
Irish-born Willie Walsh, the 59-year-old airline veteran who heads the airline peak body, the International Air Transport Association, has a warning for the region: recovery for Asia-Pacific carriers is likely to be delayed because of the risk averse approach of Asian governments and the slow take-up of COVID-19 vaccines among their citizens. Read More »
In Asia, he explained to Orient Aviation last month, around 25% of the population has been vaccinated, which is comparable with global numbers. “But that is significantly behind countries such as the UK, Israel, the U.S. and the UAE. All of them are in the 60% - 70% range. Singapore is obviously doing very well with vaccination but most of Asia is lagging behind. I think it will suggest the recovery [in the region] will take longer,” he said.
Part of the problem, Walsh believed, is Asia-Pacific restrictions on travel and quarantine that do not look like ending any time soon. “Once the restrictions are removed the demand is there. In fact, it is very strong. All of the evidence supports that. The recovery will be quick once the restrictions are removed, but given what we are seeing in Asia, and the risk appetite those Asian countries have, it is going to take longer for the restrictions to be removed in Asia than it will in other parts of the world,” he said.
Walsh, who started his career as a pilot with Aer Lingus, rose to chief executive of the Irish carrier, moved to running British Airways and then the International Airline Group (IAG), stepped down from IAG a year ago. He accepted the position of IATA director general, as successor to Alexandre de Juniac, two months later. Some may have said “no thanks” to taking charge of the global airline association enduring an unprecedented crisis, but Walsh did not hesitate in accepting the job.
“I felt the industry needed to have a strong voice at this stage. I believe, and always have believed, IATA is important to the industry. Given my background, the knowledge I have of the industry, the fact I know how airlines operate and also that I know most of the players in the industry, I felt I could contribute and could hit the ground running. I felt bad leaving the industry when I did. You don’t want to leave [at this time] so when I was approached about this I had absolutely no hesitation in saying yes,” Walsh said.
Having spent 13 years as an IATA Board of Governors member, Walsh is well versed in the modus operandi of the association. “I am really happy to make a contribution, play my part and support all of the former competitors who I really feel sorry for at a time like this. It’s a horrible time to be an airline CEO, but I have great faith and confidence in them and the industry. I am looking forward to getting through this and enjoying the recovery phase that is clearly going to be an exciting time,” he said.
Walsh has not been slow to make changes at the association. He has appointed a deputy director general, the first IATA has had. The group’s Asia-Pacific chief, Conrad Clifford, has moved from Singapore to Geneva to take up the post. A search is underway for Clifford’s successor.
“It has been an issue debated for many years. When I was on the [IATA] board the DG was often encouraged to appoint a deputy because the role comes with a lot of external commitments and travel. The view was it might be sensible to have somebody to deputize, either to travel on behalf of the DG to represent the DG or run the shop at home when the DG is travelling,” he said.
Part of Walsh’s restructuring is making Geneva the centre of operations. Until now, IATA has had two principal offices: Geneva and Montreal. “In any organization it is difficult to justify two principal offices,” Walsh said. “At a time of crisis like this you have to focus on your cost base so we are going to rationalize the focus on Geneva as the principal office. The main focus of the Montreal office will be engagement with ICAO (International Civil Aviation Organization) and other aviation parties that are based there. We will continue to have a strong presence in Montreal, but the executive function of the business will be in Geneva.”
Walsh makes one issue clear. IATA will continue to fight long and hard to convince governments being aboard a plane is one of the safest places you can be during the pandemic and that restrictions such as border closures and quarantine should be eased. “We have to continue to put the data in front of people. Most people want to be informed and make reasonable decisions based on their own risk assessment and their own risk appetite. We are not saying there is zero risk. There is risk in everything. I think that’s the difference. In our industry we manage risk. That’s the very basis of the industry and how successful and secure it is,” Walsh said. “We understand the nature of risk. We are all the time assessing it and ensuring the measures we have in place are sufficient to mitigate against the risk that we have identified. “Politicians are less comfortable with risk. They don’t like being accused of making the wrong decisions. We have to keep putting the data out there and keep showing the evidence. We have to be challenging the restrictions.” Willie Walsh, International Air Transport Association director general |
As for the pandemic, Walsh does not think it is going on longer than airlines expected. “What is going on longer than expected are the restrictions on international travel. Like all sorts of viruses I assumed we would end up living with this one as we live with other viruses. I think governments have continued to take an extremely risk averse approach to this, particularly in the Asia-Pacific,” he said.
He pointed to seven-day averages of daily COVID cases. “Mid last month, the world was at 57.6. Yet Australia, before the recent outbreaks of the Delta variant, particularly in Sydney and Melbourne, was a mere 3.18. “Yet the UK is removing all restrictions. What we are seeing is a completely different approach from governments. Some are basing their decisions on the data, but others have adopted a zero COVID approach, including probably most of Asia and Australia and New Zealand in particular,” Walsh said.
“In countries with high levels of vaccinations, governments are more willing to acknowledge the pandemic is just part of our lives and vaccination is the key to enabling people to return to a more normal environment.”
Walsh also is disappointed at the failure of governments to co-ordinate responses to the pandemic, particularly testing. “You have agencies like the WHO (World Health Organization) and ICAO. They come out with measures they believe should be applied on a global basis yet governments are looking at them and then doing the wrong thing,” he said.
“I keep highlighting the EU (European Union), 27 countries you would have thought could co-ordinate testing regimes. Instead, there is every combination of testing you could imagine.
“Some require PCRs (the test used to detect a person has COVID-19), within 24 hours of travel, others 48 hours and even 72 hours. Ten countries think it is safe to do a PCR within 72 hours. What do the the other 17 see that makes them do something different? This is extremely frustrating and very confusing for travellers.
“People read the restrictions applicable to their country and assume, rationally so, there will be similar if not the same measures in other countries. They are often frustrated to find a completely different regime. It has been not just disappointing but one of the issues we really do have to challenge.
• Acceptance by governments that COVID-19 is part of daily living in the same way as the common flu is accepted • Bringing governments together to establish global standardised testing and “vaccine passport” travel documents for travel worldwide • Challenge of re-establishing pre-pandemic route networks especially if air passenger demand takes off at faster levels than airlines can accommodate • Managing repayment of global airline debt, estimated to be US$650 billion at present and still to stabilise • Cash flow curtailed as airline customers are not booking ahead fearing sudden flight cancellations or new imposition of border closures and unanticipated or sudden extended quarantine regulations at borders |
“It’s the same virus everywhere. This is a common virus. There should be common measures taken to address it. The world has to learn because this virus is not going to go away, the same way as the flu has not gone away. Flu mutates every year. We take measures to address that every year.
“When we get through this, looking back on it, there is a lot not just the industry needs to learn, but governments need to learn. You would expect global organizations like WHO, the United Nations and ICAO would pull together and address this situation in a co-ordinated fashion.”
When recovery does come, Walsh believes re-establishing networks will be challenging for airlines. “We are used to dealing with challenges. We are used to managing rapidly changing requirements when it comes to security or safety issues,” he said.
“We can cope with it. We would prefer not to have to, but there are a number of factors that will be on the minds of CEOs. All airline balance sheets have been very much stressed. The level of debt for the industry globally we estimate to be more than $650 billion, up from $220 billion since the pandemic started. That will increase,” Walsh said.
“People will have been shocked as they saw liquidity significantly tighten during the first three or four months of the pandemic. We had all been hoping things would start relaxing and airlines could start building up cash reserves again.
“You will see a cautious approach being adopted by many airlines because the key for a lot of carriers is their costs have significantly reduced, principally because they are not flying. We are avoiding fuel costs, which is the single biggest cost. Labor costs have been significantly reduced with a lot of countries providing employee support.
“These costs will come back very quickly as airlines build up their networks. I expect a lot of them will be very cautious about how they re-establish their networks, which suggests there will be parts of the global network that will be lost and lost for some time.”
Walsh cites a comparison between the current crisis and previous global economic crises in 2001 and 2009. In 2001, global airline industry revenues fell by 6.4% compared with 2000. In 2009, revenue collapsed by 16.5% versus 2008. In the current pandemic, 2020 revenues were down 56% against 2019. Despite these disastrous numbers, Walsh said carriers have done an incredible job in the face of massive losses by simply surviving the crisis and maintaining their commitment to sustainability goals.
“Airlines have demonstrated resilience from a financial point of view. Still, there are challenges for a lot of airlines,” he said. “They have to be careful because there is this disconnect between cash flow of sales in advance of carriage. People are not booking in advance at the moment. And naturally, because they don’t know when markets will open,” he said. “So, you are going to see the traditional cash in and cash out dynamic change in the short-term.
“But the factor that is really positive is the focus on the environment has not in any way waned. It reflects the external reality that a focus on the environment has, if anything, increased as we have gone through this pandemic. The industry recognizes we have a job to do. I have been really impressed with the continuing investment by airlines in support of their environmental measures as we go through this crisis.”
Response(s). Share your ideas.
brenda david says:
October 4th 2024 08:35am
Maria Schaeffler says:
August 20th 2024 11:18am
Maria Schaeffler says:
August 20th 2024 11:18am
alice albert says:
August 15th 2024 01:33pm
alice albert says:
August 9th 2024 09:32pm
alice albert says:
August 9th 2024 02:49pm
wayne murray says:
July 30th 2024 11:40pm
wayne murray says:
July 30th 2024 11:40am
wayne murray says:
July 30th 2024 11:39am
Abigail Kelly says:
July 19th 2024 09:46pm
Arthur says:
July 2nd 2024 09:36pm
lily says:
June 22nd 2024 03:27pm
lily says:
June 22nd 2024 03:26pm
Emily Faye says:
June 17th 2024 10:40am
Emily Faye says:
June 17th 2024 10:40am
jane says:
June 14th 2024 01:35pm
Anne says:
June 14th 2024 01:25pm
Jessica Willock says:
June 12th 2024 02:13pm
Jessica Willock says:
June 12th 2024 02:12pm
Clara Fredrick says:
June 10th 2024 03:00pm
EMILY NOAH says:
May 31st 2024 01:00pm
EMILY NOAH says:
May 31st 2024 01:00pm
Cyril Vivian says:
May 9th 2024 11:24am
wills Cole says:
May 8th 2024 10:05am
alice albert says:
April 13th 2024 10:04pm
Lord Robert francis says:
March 30th 2024 08:06pm
Smith Devir says:
March 16th 2024 01:23am
Elizabeth says:
February 29th 2024 12:07am
Ivan says:
February 20th 2024 06:25pm
kathryn maxwell says:
February 17th 2024 09:11pm
Nancy Richard says:
February 10th 2024 03:41pm
Nancy Richard says:
February 10th 2024 03:40pm
kathryn maxwell says:
January 27th 2024 04:31am
alice albert says:
January 4th 2024 01:23am
alice albert says:
December 26th 2023 11:56pm
Karen Schravemade says:
October 7th 2023 01:49pm
shelly jake says:
September 11th 2023 07:05am
Manuel Franco says:
September 2nd 2023 12:09am
Susan William says:
August 11th 2023 09:57am
Susan William says:
August 11th 2023 09:21am
Ian Martin says:
July 1st 2023 09:31pm
Luke Curry says:
July 1st 2023 08:42pm
Raph Ben says:
June 29th 2023 12:37pm
George Carl says:
June 21st 2023 01:34pm
Smith Devir Duarte says:
June 21st 2023 12:39am
Smith Devir Duarte says:
June 21st 2023 12:29am
Fraya says:
May 29th 2023 02:10pm
OLIVIA BOLTON says:
May 13th 2023 07:26am
BLANK ATM CARD says:
April 22nd 2023 02:56am
shelly jake says:
April 11th 2023 09:27am
shelly jake says:
April 11th 2023 09:25am
Debbie Arnold says:
March 14th 2023 02:47pm
Debbie Arnold says:
March 14th 2023 02:47pm
BRYAN says:
March 13th 2023 12:37pm
Andrew Ronald says:
March 12th 2023 07:56pm
Andrew Ronald says:
March 12th 2023 07:56pm
BRYAN says:
March 10th 2023 12:00pm
callie rogers says:
March 7th 2023 04:48pm
Katherine Griffith says:
March 7th 2023 07:07am
shelly jake says:
March 6th 2023 05:42am
shelly jake says:
March 5th 2023 04:05pm
Debbie Arnold says:
March 4th 2023 09:14am
LISA DONALDS says:
March 2nd 2023 06:47am
Debbie Arnold says:
February 28th 2023 03:48am
Vivian Marcus says:
February 24th 2023 09:15am
Debbie Arnold says:
February 19th 2023 06:36pm
Debbie Arnold says:
February 18th 2023 02:07am
Debbie Arnold says:
February 18th 2023 02:06am
daniella nelson says:
February 16th 2023 09:45pm
shelly jake says:
February 3rd 2023 03:07pm
Olivia Lucas says:
January 29th 2023 09:15am
Olivia Lucas says:
January 27th 2023 03:55am
emmageneely says:
January 26th 2023 10:05pm
mike dolches says:
January 25th 2023 10:36am
mike dolches says:
January 25th 2023 10:36am
Olivia Lucas says:
December 16th 2022 11:44pm
Vanessa Cosmin says:
November 30th 2022 06:53pm
Barbara Romney says:
November 28th 2022 08:03pm
Katherine Griffith says:
November 23rd 2022 07:01am
Danny Convile says:
November 22nd 2022 10:34am
Neil Trotter says:
November 13th 2022 08:07pm
glyphses says:
November 13th 2022 04:02pm
Natasha Thompson says:
November 12th 2022 09:46am
kathy says:
November 12th 2022 07:06am
daniella nelson says:
November 10th 2022 02:27pm
daniella nelson says:
November 10th 2022 02:18pm
Olivia Grayson says:
November 9th 2022 06:04pm
Schwab says:
November 7th 2022 06:47pm
Mary halen says:
November 6th 2022 03:18pm
Natasha Thompson says:
November 1st 2022 01:54pm
Veron Hobbs says:
October 29th 2022 06:46am
Olivia Lucas says:
October 18th 2022 11:00am
Henry Mark says:
October 15th 2022 12:25am
ashley says:
October 8th 2022 08:07pm
Richard Julian says:
September 29th 2022 09:43pm
winston says:
September 29th 2022 11:45am
Churchill Anderson says:
September 15th 2022 07:58pm
lynn says:
September 13th 2022 07:33pm
Irene Stack says:
September 9th 2022 04:51pm
joy says:
September 6th 2022 09:57pm
Flores Morales says:
September 3rd 2022 12:58pm
Flores Morales says:
September 3rd 2022 12:55pm
rolandscott says:
August 31st 2022 05:02pm
rolandscott says:
August 30th 2022 09:26pm
Linda sally says:
August 27th 2022 10:45am
Linda sally says:
August 27th 2022 10:45am
Flores Morales says:
August 22nd 2022 07:49pm
Flores Morales says:
August 22nd 2022 07:47pm
arthur joe says:
August 20th 2022 07:53pm
arthur joe says:
August 20th 2022 07:52pm
Melissa Jackson says:
August 20th 2022 06:25am
Margaret Atwood says:
August 11th 2022 08:08am
Margaret Atwood says:
August 11th 2022 07:54am
Margaret Atwood says:
August 11th 2022 07:54am
Anna Smith says:
August 7th 2022 05:22pm
Jocelyn Galindo says:
August 5th 2022 12:44am
Sophia Leo says:
August 1st 2022 01:42pm
Kimberlie Wells says:
July 16th 2022 01:55pm
Katherine Griffith says:
July 16th 2022 04:19am
Crown Star says:
July 11th 2022 12:46am
smith benson says:
July 2nd 2022 05:08am
EVELIN KAY says:
June 27th 2022 01:09pm
Leah Gerics says:
June 23rd 2022 11:58pm
Ann Earnis says:
June 21st 2022 12:55pm
Ann Earnis says:
June 21st 2022 12:54pm
Ann Earnis says:
June 21st 2022 12:54pm
vivian rose says:
June 21st 2022 06:37am
SCOTT WYCOFF says:
June 14th 2022 04:55am
Margaret Atwood says:
June 13th 2022 02:52am
Rosa Bruzzese says:
June 12th 2022 12:24am
Rosa Bruzzese says:
June 12th 2022 12:23am
kumar supriya says:
June 11th 2022 10:54am
Patrick Williams says:
June 8th 2022 01:46pm
Isabella Brown says:
June 7th 2022 07:25pm
Janet Willis says:
June 6th 2022 03:33am
sasha says:
June 3rd 2022 09:24pm
Lisa oney says:
May 23rd 2022 09:17am
Jane Baker says:
May 21st 2022 04:07pm
Brian Parisi says:
May 20th 2022 10:54pm
Laura Spears says:
May 17th 2022 12:47am
Laura Spears says:
May 17th 2022 12:47am
David Powell says:
May 6th 2022 02:48pm
David Powell says:
May 6th 2022 02:41pm
Jeffery says:
April 28th 2022 12:14pm
Christopher Lucas says:
March 28th 2022 07:15pm
Joshua Nathan says:
March 26th 2022 10:54am
Rhonda Potter says:
March 20th 2022 01:02pm
Juan Hernandez says:
March 17th 2022 12:24pm
Ian Martin says:
March 16th 2022 10:14am
SPELL says:
February 28th 2022 09:56pm
SPELL says:
February 28th 2022 09:55pm
Albert Monroe says:
February 19th 2022 08:02am
julie kennedy says:
February 15th 2022 10:55pm
ford williams says:
February 10th 2022 11:42pm
kate middlestone says:
February 5th 2022 06:46pm
kate middlestone says:
February 5th 2022 06:46pm
Allan says:
December 29th 2021 06:16pm
Franco says:
December 29th 2021 06:16pm
Charlotte says:
December 29th 2021 06:15pm
Joseph says:
December 29th 2021 06:14pm
Doctor Kenneth says:
December 29th 2021 06:14pm
Dan Powder says:
December 29th 2021 06:09pm
James says:
December 29th 2021 06:09pm
Isaac says:
December 29th 2021 06:08pm
John says:
December 29th 2021 06:08pm
Sam says:
December 29th 2021 06:07pm
Thomas says:
December 29th 2021 06:07pm
Rose says:
December 29th 2021 06:06pm
Ciara says:
December 29th 2021 06:06pm
Emily says:
December 29th 2021 06:05pm
Henny says:
December 29th 2021 06:05pm
Allen says:
December 29th 2021 06:04pm
James says:
December 29th 2021 06:04pm
Kimberly says:
December 29th 2021 06:03pm
Carly says:
December 29th 2021 06:03pm
Alicia says:
December 29th 2021 06:02pm
Evelyn says:
December 29th 2021 06:02pm
Tony says:
December 29th 2021 06:01pm
Larry says:
December 29th 2021 06:01pm
Janet says:
December 29th 2021 06:00pm
Simon says:
December 29th 2021 06:00pm
Sara says:
December 29th 2021 05:59pm
Lisa says:
December 29th 2021 05:59pm
Mary says:
December 29th 2021 05:58pm
Evans says:
December 29th 2021 05:58pm
Alex says:
December 29th 2021 05:57pm
Gina says:
December 29th 2021 05:57pm
Corie says:
December 29th 2021 05:56pm
mbuga says:
December 23rd 2021 09:18pm
mbuga says:
December 23rd 2021 09:17pm
mbuga says:
December 23rd 2021 09:10pm
mbuga says:
December 23rd 2021 09:06pm
mbuga says:
December 23rd 2021 09:02pm
maama razaq says:
December 23rd 2021 08:59pm
maama razaq says:
December 23rd 2021 08:55pm
maama razaq says:
December 23rd 2021 08:45pm
maama razaq says:
December 23rd 2021 08:41pm
maama razaq says:
December 23rd 2021 08:37pm
maama razaq says:
December 23rd 2021 08:32pm
maama razaq says:
December 23rd 2021 08:27pm
maama razaq says:
December 23rd 2021 08:22pm
maama razaq says:
December 23rd 2021 08:15pm
maama razaq says:
December 23rd 2021 08:08pm
maama razaq says:
December 23rd 2021 08:03pm
maama razaq says:
December 23rd 2021 07:55pm
maama razaq says:
December 23rd 2021 07:45pm
mbuga says:
December 23rd 2021 07:35pm
mbuga says:
December 23rd 2021 07:25pm
maama razaq says:
December 21st 2021 02:58pm
maama razaq says:
December 21st 2021 02:57pm
maama razaq says:
December 21st 2021 02:56pm
maama razaq says:
December 21st 2021 02:55pm
maama razaq says:
December 21st 2021 02:54pm
maama razaq says:
December 21st 2021 02:54pm
mbuga says:
December 21st 2021 02:52pm
mbuga says:
December 21st 2021 02:52pm
mbuga says:
December 21st 2021 02:50pm
mbuga says:
December 21st 2021 02:49pm
mbuga says:
December 21st 2021 02:46pm
Lydia Carol says:
October 25th 2021 05:05pm
Betty Kari - CREDIT REPAIR says:
October 14th 2021 07:09pm
George says:
October 8th 2021 12:50pm
Betty Kari says:
September 27th 2021 10:45pm
Nora Owen says:
September 8th 2021 07:38am
Betty Kari says:
September 7th 2021 01:30pm
Jessy Mark- CREDIT FIX says:
August 29th 2021 06:31pm
SPEAK YOUR MIND
Your email address will not be published. All fields are required.
© Orient Aviation Media Group. All Rights Reserved.
brenda david says:
October 4th 2024 08:35am