As air transport recovers to normal levels in much of the world, IATA Director General Willie Walsh discusses the issues carriers are now contending with, how the market is changing and the outlook for the industry. 

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Rush transcript

Karen Walker:

Hello everyone. And thank you for joining us for Window Seat, Aviation Week Air Transport podcast. I'm a Transport World and Group Air Transport editor in chief, Karen Walker. Welcome on board. Today, I'm absolutely delighted to be in Washington DC with the Director General of the International Air Transport Association, Willie Walsh. Willie, it's great to see you and thank you for joining us. IATA represents almost 300 of the world's airlines, and Willie took the helm just over a year ago with the pandemic crisis still tearing into the industry and people's lives. It's fair to say then Willie, that good progress has been made since last spring, but there's still a lot to do.

Willie Walsh:

If we look at it at a global level I'm pleased to say demand is very strong. Generally, where border restrictions have been removed, we're seeing a lot of pent up demand, people wanting to fly.

         I think airlines have been pleasantly surprised by the pace of which demand has come back, still a long way to go. International travel... If I look at the first quarter of this year, still only at about 42% of where we were in 2019. Domestic markets, most of them have fully recovered, if not ahead of where they were in 2019, but the pace at which we're seeing people come back has been very positive in recent weeks. And the outlook, I think for the rest of this summer is certainly much more positive than... or say even three or four months ago.

Karen Walker:

A lot of eyes on the transatlantic market this year, because as you say of the restrictions that are being lifted, borders and tests and the whole thing. So do you think this is going to be a good year for the... relatively speaking a good year for the transatlantic market?

Willie Walsh:

Yeah, I think it will be a good year. There are still some restrictions on travel into the US, so you have to be vaccinated. So that's clearly preventing full recovery, but the outlook is very positive, and speaking to airline CEOs operating on the transatlantic, they're very encouraged by the figures that they've seen recently and the bookings that they're looking at going forward. So I think transatlantic will be a positive side of the business. The part of the world that still suffering most is in Asia, international travel out of Asia is still significantly down. First quarter of this year was probably only at about 10% of where they were in 2019, but we're seeing signs of restrictions being removed there as well, right? I think Asia will continue to lag the recovery in the rest of the world.

Karen Walker:

A lot of the lagging in Asia, of course, China. That doesn't look like there's going to be a lot of change in that situation. Am I reading that correctly?

Willie Walsh:

Yeah, I would agree with you. I think China and Hong Kong have obviously been two parts... two big markets and two strategic markets that have been significantly restricted, and little evidence at this stage of the restrictions being removed. We're seeing some relaxation, but not that would be enough, I think to convince people to start flying again in that area. So it's a concern, obviously to carriers operating in that region. They've been very badly affected with the international travel so significantly reduced. But at least as I said, some parts of Asia are beginning to relax, but China and Hong Kong I think again, you're going to see those areas lag significantly behind everybody else.

Karen Walker:

And another development we've seen very recently is the lifting of requirement to wear masks in airports and on airlines.

         So we saw the UK do it. It happened very suddenly here in the US when it happened. How are airlines and people reacting to that in general?

Willie Walsh:

Yeah, I think people have welcomed that. We're looking at Europe reviewing their mandate, which we expect to be removed as well. IATA is expected to make an announcement very soon, they may even be doing it as we're talking here today. And I think that's a positive because it is creating confusion. There are people who will be happy to wear masks, but I think some of the confusion is... And I witnessed it myself, passengers flying between the UK and Ireland on a British Airways aircraft don't wear masks, not required to, but on an Aer Lingus aircraft are required to. And people just don't understand these regulations, but it's principally because one airline is regulated under the EU and the other is the UK.

         So the sooner we see these restrictions being removed, or at least if we saw common rules being applied, I think that would be in the interest of consumer. But I think at this stage, most countries appear to be heading towards the removal of that mandate.

Karen Walker:

We've seen here in the US, some issues as things have ramped up, particularly with the pilot shortage. And then elsewhere... and again, I'm thinking Europe as things have ramped up, especially around the Easter time. Labor shortages, but they seem to be more in other areas like in security and baggage handling and stuff like that, could the industry be accused of not... just as the public really does want to fly again, the industry is not capable of getting that back together.

Willie Walsh:

No, I don't think that would be fair.

         Particularly if you look at Europe, the main problem carriers are facing in Europe is getting background security checks complete. And in Europe you cannot start the training of a new employee until they have been security cleared. And I'm hearing stories in different parts of Europe, of delays up to three months to get that clearance. So that's not what airlines had expected from my own experience when I was running Aer Lingus, British Airways, IAG, it normally took a couple of weeks two, maybe three weeks, but three months, that wasn't in the planning. So I think it'd be wrong and unfair to blame airlines and airports on that.

         I think what we are seeing in the US, and I've been in the industry now, 42, 43 years. And in those 43 years, I've heard talks of pilot shortages. I've never seen one, but we're probably getting close to that. A lot of people left the industry in the US. I think there was expectations of a retirement bubble in the next few years, but this crisis has accelerated that, and it is creating a bit of a challenge for airlines. But if I'm honest, a nice problem for airline CEOs and I've given all the problems they've faced over the past two years, ramping up activity is always difficult. It's a lot easier to take capacity out, it's a lot more difficult to try and put it back in. So I'm sympathetic to airline CEOs, maybe given that I used to be one, and I know the challenges they face, but I'm confident that we'll overcome these problems.

Karen Walker:

On the pilot front particularly, but maybe also on some of more of the engineering and technical sides.

         Is this an opportunity for the industry to think outside the box a bit more on diversity...

Willie Walsh:

Yeah.

Karen Walker:

In terms of who they're recruiting...

Willie Walsh:

Absolutely.

Karen Walker:

Who they appeal to?

Willie Walsh:

Yeah, no, absolutely. The industry has a big challenge in convincing women to look at jobs that were traditionally seen as male oriented, engineering, pilots. We've been trying for many years, I think we really do need to do better, but in reality, you've got to convince children that this is an industry for them. There's no point in targeting people when they're leaving school or leaving university it's too late at that stage. Many of them will have dismissed the option or will not have even given thought of the option to look at these careers. And I think it's an exciting industry, it's a great industry. We have seen some progress, but it's very, very slow.

         And I think as an industry, we need to do more. And so we need to be able to get the message out to kids at a much younger age that the airline industry is open to them and male or female, the opportunities are there.

Karen Walker:

And that it's an affordable career track. I mean, you're a former pilot, you know it's an expensive career track. Is that more where airlines could come in, in terms of aiding people financially?

Willie Walsh:

Yeah. And we are beginning to see that again. So I was fortunate in that my pilot training was funded by Aer Lingus. Aer Lingus operated, fully funded pilot cadet scheme. When I started in 1979, there were 20 of us under course, fully funded by Aer Lingus. And I think it reflected the nature of the business there. There wasn't a natural supply of pilots in Ireland, so Aer Lingus had to go out and generate it by offering the training.

         It is expensive. I think it does deter a lot of people, which is a shame. I think there is definitely more that airlines can do. And I think they recognize that, and will be looking at other options to try and assist people who want to come into the industry. But the option to pursue an engineering career in aviation doesn't have the same financial sort of costs associated with it. And I think that's an area where we could do an awful lot better convincing girls when in school to consider engineering jobs, jobs as mechanics within the industry. And it is really exciting. So I'm optimistic actually that we will start seeing much greater progress. And it's good to see a number of airlines now appointing female CEOs.

         It's always been the view that if you can see evidence of somebody doing the job, you're more inclined to think of that as an option for you. So we've seen Pegasus in Turkey, the first female CEO in a Turkish airline, in EL AL, again, the first female CEO of an Israeli airline. So these are very good developments.

Karen Walker:

So we're not far away now in June, it'll be the IATA AGM, an in-person event in Doha. I'm sure it'll be extremely well attended. And some of the points you've just raised will obviously be on the agenda. Can you talk about some other things that would be high priority? I'm thinking maybe Ukraine...

Willie Walsh:

Yeah.

Karen Walker:

Sustainability.

Willie Walsh:

Yeah. I think there will be a lot of interest in what's happening with the Russian invasion of Ukraine and the war there.

         And clearly everybody would want to see that resolved, but it is having an impact on the industry. The most obvious one is the increase in the oil price that we've witnessed as a result of that. I think there will be long term implications around the use of Russian airspace and Russian over flights, not having a huge impact today. Principally because traffic to Asia and from Asia to Europe has not recovered at the same pace as elsewhere. But these are issues that will have I think, a longer term impact the longer this war goes on. And we've seen the issues in relation to leased aircraft in Russia, and what does that mean? So will this change the lessor's appetite in certain markets? Will we see costs increase? Will we see greater protections in relation to leased aircraft?

         So it definitely is something that the industry will want to discuss. And then on sustainability, I think we're making great progress on the path to net zero in 2050, but there are other environmental issues that we need to tackle. And one that's probably grown in terms of challenge in recent years is single use plastics. I think we were making really good progress prior to the pandemic, but the pandemic has forced airlines to use a lot more plastic than they would like, and more than they were using.

         So yeah, the environment will definitely be a focus. I think the ongoing move to increased diversity within the industry will be a focus. And clearly the war in Ukraine will be a focus.

Karen Walker:

Never a shortage of topics, that's for sure is the old challenges.

Willie Walsh:

No, there's definitely always something for us to talk about, and yeah, and always new challenges. But the positive is less of a focus on COVID, because it's clear that we are seeing good progress and seeing some really positive indications that I think will help to give confidence in terms of the financial recovery in the industry as well.

Karen Walker:

Excellent. Well, it's always great talking with you. Thank you so much for your time and thank you to our listeners. I hope you'll join us again next week for our next episode and make sure you don't miss it by subscribing to the Window Seat podcast on Apple Podcasts or wherever you listen.

         Until then, I hope you're looking forward to your next flight. This is Karen Walker, disembarking from Window Seat.