Meeting in New Delhi for aviation world shaken by Trump

Air travel rebounded strongly after COVID-19, with record passenger numbers and profits back in the black. But trade wars launched under Donald Trump have cast doubt on long-term growth. The upcoming IATA annual meeting in New Delhi, running Sunday to Tuesday, may offer some answers, with around 1,700 industry leaders expected to attend.

IATA, which brings together about 350 airlines representing 80% of world air traffic, will update its profitability and traffic forecasts on Monday. In December, the organization had projected a record 5.2 billion air journeys by 2025, a 6.7% increase over 2024, which was already an unprecedented year. It envisioned carriers reaping $36.6 billion in cumulative net profits on revenues exceeding $1 trillion.

Trade wars

But Trump’s return to the White House in January potentially rendered these forecasts obsolete, primarily due to the effects of his federal budget cuts.

In recent months, the North American air transport market, which represents 23% of global traffic, has started to contract. Several U.S.-based airlines have warned they will not meet their financial targets. “The aviation sector is always sensitive to economic and political conditions,” explains Paul Chiambaretto, professor of strategy and marketing at Montpellier Business School, to AFP: “Any form of uncertainty will reduce traffic, particularly business travel,” which is the most profitable.

IATA itself has noted “signs of fragility in consumer and business confidence” in the United States. Its director general, Willie Walsh, lamented on Thursday “a persistent weakness in the U.S. domestic market and a sharp drop in premium travel in North America,” contrasting with the rest of the world, largely in the black since the beginning of the year.

Trump launched a global tariff offensive on April 2, but the situation remains highly volatile: in addition to a delay of some surtaxes to early July, pending negotiations with targeted countries, a U.S. court challenged the White House’s authority to impose such measures on Wednesday. Then, a few hours later, an appeals court upheld the tariffs, pending a ruling on the merits.

The aviation industry, the epitome of globalization, has benefited from the removal of import taxes and rising living standards, particularly in Asia: the number of air trips has tripled globally since 2000.

On the contrary, the return of protectionism endangers the model of aircraft manufacturers, whose assembly lines involve suppliers worldwide. Their costs risk increasing and affecting carriers.

For travelers, tensions between states may discourage part of the clientele, and arrivals in the United States will be closely watched this summer. “Today, bookings on the North Atlantic are weaker than they were at the same date last year,” notes Didier Brechemier, an aviation sector expert at Roland Berger.

Environment less of a priority?

Good news nonetheless for carriers: the drop in oil prices, as a consequence of an anticipated economic slowdown, allows them to foresee a reduction of hundreds of millions of dollars from their fuel bill, which accounts for between a quarter and a third of their operational costs.

The new Republican administration supports fossil energy development across the board, in contrast to Democrat Joe Biden’s administration, which had subsidized renewable aviation fuels. The airlines have committed to no longer contributing to climate warming by 2050 and were mainly counting on these “green” products to achieve this.

India is experiencing explosive growth in its aviation sector, with a doubling of airports and passengers over the past decade. As evidence of the government's attention, Prime Minister Narendra Modi is scheduled to address the delegates on Monday afternoon, IATA said on Friday. But the country, after recent deadly exchanges with Pakistan, also illustrated the fragility of civil aviation in the face of geopolitical upheavals, with airlines having to avoid the airspace of the belligerents.