Airlines bullish on recovery, but labor shortages could hurt growth

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DOHA (Reuters) – Global airlines battered by COVID-19 appear confident of cutting losses but still face challenges such as airport labor shortages, which could restrict growth after the crisis, industry leaders said at a summit in Doha.

Recent flight delays and cancellations have largely been blamed on understaffing, as increasing numbers of people are deserting low-paying airport work for flexible working practices that have flourished during the pandemic.

The head of host airline Qatar Airways, Akbar Al Baker, said labor shortages will be a big challenge in the coming months, although he added that his airline was “inundated with requests of employment”.

“People have gotten into the bad habit of working from home,” Al Baker told a news conference.

“They feel they don’t need to go into an industry that really needs people on the ground,” he said, adding that staffing shortages at airports could hurt growth.

Emirates airline chairman Tim Clark said the Dubai carrier had been told by authorities at London Heathrow to cut a short-term A380 flight this weekend, causing disruption.

But he urged the industry not to waste time bickering.

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“The airport side of things needs to sort out their labor supply in the critical areas of baggage, check-in, baggage systems. Keep up the work. There’s a lot of blame, everyone at the throat … Guys, just get the job done.”

Clark added: “Do I see this sorting out over the next few months? Yes”

JetBlue Airways Corp CEO Robin Hayes, speaking on labor shortages in the industry at a panel in Doha, said he was confident the industry would return to “a new normalcy” over the next two to three years.

Global airlines went on the offensive at the summit, criticizing governments and airports for their handling of the pandemic recovery.

“The cost of government mismanagement has been enormous. It has devastated economies, disrupted supply chains and destroyed jobs,” said Willie Walsh, chief executive of the International Air Transport Association, during the annual industry meeting of over 100 airline bosses.

Airlines have themselves been criticized by governments and consumer groups for disruption as travel demand picks up faster than expected, but the airline industry sees a common thread in uncoordinated government responses to the crisis.

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“There was a virus, but each government invented its own methodology,” Walsh told the conference. “How can anyone trust such a chaotic, uncoordinated and knee-jerk response from governments?”

“NOT THE RIGHT ANSWER”

IATA’s Walsh cited research showing border closures had barely halted the spread of the pandemic while all but shutting down international travel and crippling economies.

“Closing borders is not the right response to a pandemic,” Walsh said.

Governments around the world have lent more than $200 billion in support to airlines to curb bankruptcies during the pandemic, according to UK-based aviation consultancy Ishka.

Airlines are expected to cut losses in 2022 and could turn a profit next year as air travel resumes, IATA said. Walsh said he was “not concerned” about the current demand and supply environment.

The chief executive of Korean Air Lines Co Ltd said he feared rising interest rates and inflation would hurt consumer demand and growing competition would drive down ticket prices. The high value of the US dollar is “painful” and makes the cost of debt higher, he added.

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United Airlines has addressed fuel prices, with chief executive Scott Kirby saying he expects them to stay high in the long term.

Speaking to reporters, he added that based on current prices, the airline’s fuel bill would be $12 billion this year.

Walsh said confused government policies had compounded the disruption seen particularly in Europe with flights restarting.

Britain has criticized airline delays and called on the industry to refrain from overbooking flights they cannot operate.

Airlines and airports clash frequently at major industry gatherings, with government interests and jobs at stake.

Walsh, who earned a reputation as a murderer in clashes with unions and governments as a former head of British Airways, rallied CEOs under pressure by attacking the practice of raising airport charges to claw back revenue lost during the crisis.

“Try this in a competitive business. ‘Dear customer, we are charging you double for your coffee today because you couldn’t buy one yesterday’. Who would accept that?” he said.

Airports said they were unfairly criticized by airlines and called on them to focus on solving their own problems.

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