Taxation won’t solve sustainability issues, says IATA director

Akbar Al Baker, Group CEO, Qatar Airways and Willie Walsh, IATA’s Director General, were present at IATA’s World Financial Symposium and shared their views on critical points affecting the aviation industry and the world in general. IATA’s World Financial Symposium took place in Doha, Qatar, from the 19th until the 22nd of September.

For Baker, the immediate challenges were political upheaval, high oil prices, a lack of trained staff, and infrastructure inadequacies. In the longer term, sustainability was the overriding concern, as reported by IATA Airlines magazine. Baker underlined that huge investment would be needed in new aircraft and new technologies with the underlying risk that airlines won’t have the finance needed to invest in sustainable solutions due to certain regulations.

According to Willie Walsh, most CO2 is generated by long-haul flights for which there is no alternative to aircraft. Connectivity would be sacrificed for minimal environmental gain, Walsh said, adding that money gained through airline taxes may not specifically be used to reduce carbon.

The right policy framework is absolutely critical to sustainability.

Willie Walsh, IATA’s Director General

Qatar Airways fared better than most but still had to shrink networks. Baker stated that Doha’s Hamad International Airport will soon open an expansion that will increase capacity to 58 million passengers per annum in time for the FIFA World Cup. In January 2023, the airport will break ground on the next phase of development that will see its passenger handling ability jump to 70mppa by late 2025.

Baker and Walsh agreed that collaboration within the industry and with external partners is essential. According to both, oil companies must do more in terms of sustainable aviation fuels (SAF) production. Baker said that Qatar Airways would happily buy more SAF if they were available at a lower price. SAF are up to three times more expensive than kerosene and the fact that any SAF are being purchased is a sign of airline commitment to environmental mitigation.

Hybrid-electric power won’t be in widespread use until the 2030s, the leaders noted. “SAF production becomes even more important,” Walsh said. The critical factor is that airlines have enough cash to invest whenever these breakthroughs become available. “The industry needs deep pockets,” Baker stressed. There will be ups and downs but airlines should ensure they have enough liquidity to keep going and to invest at appropriate moments.

The decade preceding the pandemic was the most successful in aviation history. Profit margin was 5.5%. The leaders highlighted that decisions on investments now, especially in sustainability, will have a significant impact on airline finances in the short and long term and affect future investment capability.

Baker concluded by saying that the potential for tourism and air travel demand could be affected by crises or poor regulations. “We are in dangerous times,” he said. “We just don’t know how things will develop.”

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