Airlines Cite Taxes, Rules as Key Concern-Willie

Airlines are grappling with rising fuel costs linked to the conflict in the Middle East, but industry leaders say taxes and regulatory burdens pose a greater threat to their profitability.

Speaking at the International Air Transport Association (IATA) annual conference in Rio de Janeiro, IATA Director General Willie Walsh said average jet fuel prices are projected to rise by about 70 per cent compared to the previous year, adding roughly $100 billion to the industry’s total fuel bill.

Despite concerns over the impact of the conflict on fuel costs and airfares, airline executives at the conference appeared relatively calm about the situation.

Pegasus Airlines Chief Executive Officer Guliz Ozturk noted that airlines routinely prepare for different scenarios at the start of each year, but unexpected developments often alter industry expectations.

Read Also:

• payaza-secures-a-credit-ratings-upgrade-across-four-agencies
• military-coups-slash-investment-by-14-3-weaken-growth-across-sub-saharan-africa-imf

IATA Chief Economist Marie Owens Thomsen recalled that concerns surrounding global trade tensions dominated discussions at the previous conference in New Delhi after tariff measures introduced by the United States created widespread uncertainty. She said those fears had initially appeared overwhelming, yet the industry managed to adapt.

This year, however, airline leaders devoted little attention to geopolitical tensions despite the ongoing conflict in the Middle East, which has pushed up fuel prices and weakened profitability across the sector.

Instead, IATA used the conference to criticise governments that have imposed ticket taxes or introduced regulations affecting airline operations, particularly measures aimed at reducing carbon emissions.

The European Union attracted significant criticism, with Walsh challenging the bloc’s support for stronger passenger compensation rules for flight disruptions.

Industry executives also questioned EU regulations requiring airlines to use minimum levels of sustainable aviation fuels, arguing that such policies could place additional financial pressure on carriers.

Even when asked about the possibility of a prolonged disruption to oil and jet fuel exports from the Gulf region, airline representatives expressed confidence that severe shortages were unlikely.

Research Director Eleanor Budds said a prolonged crisis remained only one of several possible scenarios and was not the industry’s central expectation.

She added that current forecasts do not anticipate shortages of jet fuel, with existing assessments focused primarily on price-related risks rather than supply constraints.