Airline consolidation set back five years, says IATA chief

PARIS (CNA) – The large-scale government intervention in airlines triggered by the coronavirus crisis will hold back sector consolidation for up to five years, the head of global industry body International Air Transport Association (IATA) predicted on Wednesday.

IATA outgoing Director General Alexandre de Juniac made the comments in an interview with Reuters as the organisation called for a new round of subsidies to weather the COVID-19 pandemic.

“Governments have taken big stakes in many of their national airlines, so it will be difficult for them to sell this asset to any foreign actor and explain that to the taxpayer,” De Juniac said. “It will be a factor that will prevent consolidation in the coming three to five years.”

Airline tie-ups already faced obstacles before the crisis, including ownership rules linked to bilateral aviation treaties. That has not prevented the emergence of multinationals such as IAG, Lufthansa and Air France-KLM that preserve national carriers within their group structures.

Aid has further raised the hurdles by piling up debts, shielding potential targets and tying would-be buyers’ hands. European Union (EU) rules bar recipients such as Lufthansa and Air France-KLM from making acquisitions until bailouts are repaid.The IATA head, who hands over next month to IAG veteran Willie Walsh, also urged governments that have already provided USD225 billion in sector aid to support a travel recovery through new air ticket and route subsidies.

Australia last week announced plans to subsidise 800,000 domestic flights as part of a AUS1.2 billion (USD925 million) travel revival package.

“We’ve already seen some plans by governments to subsidise tickets, routes and domestic journeys,” de Juniac said during a media briefing later on Wednesday. “I urge governments to consider stimulus measures.”