Wednesday 29 June 2016

IATA jump the Brexit gun.

The normally conservative IATA has joined the frenzied speculation on the possible effects of the UK leaving the EU by saying that passengers could fall by 3-5% by 2020 due to the likely fall of sterling and economic downturn.

The reality is that the vote having been announced on Friday and it now only being the following Wednesday, nobody has a clue as to which way the processes and dynamics of the divorce are going to go and what the end position is going to look like. The possibilities cover a wide spectrum. The outcome will depend on how much common sense and how little political grandstanding prevails as well as what other factors come into or out of play. There is a lot of water to flow under bridges and over the Channel tunnel during the next couple of years. In the meantime life will go on, people and businesses will figure out how to adapt to new realities as they emerge and even if lower baselines do temporarily emerge upward growth from them will resume unless the economy is seriously mismanaged. No doubt the usual suspects will claim that a third Heathrow runway or a less satisfactory alternative is not now needed. The fact is that, given that it's already long overdue and that it will be a boost to economic activity, the need for more London runway capacity is undiminished. 

So, many thanks IATA for the view. Like all others currently obscuring the sky, it should though be put on the shelf and left to mature.

Istanbul strikes chlly chord.

The Istanbul attack is exactly what the new megahub airports and airlines of Turkey and the Middle East had hoped would never happen in a business where confidence is so crucial. Terrorist hits are the one thing that could derail their seemingly all conquering approach to establishing themselves as the new dominant force on routes between Europe, the Middle East, Africa, Asia and Australasia. Conveniently situated close to midpoints between almost anywhere and anywhere else and able to exploit their 24/7 base operations they are able to grow and make profits where others fear to go, each route adding to the classic hub synergy of all the others at, thanks to the mix of  sector lengths required and high utilisation, costs way below those which could be achieved by airlines based towards the ends of the routes. Security has always been their biggest but unstated fear, and the most difficult to guarantee. Overnight it has become more urgent.