An Air New Zealand Dreamliner takes off from Auckland Airport. Photo / Grant Bradley
An Air New Zealand Dreamliner takes off from Auckland Airport. Photo / Grant Bradley
Airline chiefs head for Cancun in Mexico for their annual gathering as the industry is set to deliver another strong financial performance, including covering its cost of capital for a record third consecutive year.
Fuel prices have been relatively low for the past two years, travellers are flying in recordnumbers and there's been a revival in business and consumer confidence, according to International Air Transport Association figures.
They also show air cargo volumes are up, as air freight captures a bigger share of world trade.
Here, Air New Zealand shares are trading at pre-9/11 terror attack levels, figures out today from IATA show demand for seats in April growing at the fastest rate in six years. Passengers are winning too with air fares around the world 10 per cent lower than what they were a year ago.
But in aviation a crisis can be just around the corner and clouds are forming.
The airline bosses and aircraft builders who will be at the IATA meeting in the Mexican resort town will discuss the growing move in some parts of the world - notably the world's biggest aviation market the United States - to throw up border restrictions and impose trade restrictions.
After years of linking some of the most diverse cities and countries, airlines are now wondering whether the rise of globalisation is coming to an end.
While the meeting is held to conduct the formal business of the association, over two days keynote speeches and panel discussions are where issues are thrashed out for the industry which contributes an estimated $1 trillion a year to global gross domestic product.
A session on security will focus on the ban on laptops and other large electronic devices in aircraft cabins from some Middle Eastern and North African airports into Britain and the United States.
The United States has not specified the threat and has not ruled out extending the ban to other countries which, if imposed in Europe could cost more than $1.4 billion a year in lost productivity, longer travel times and costs of renting devices on board planes.
IATA and affected carriers have questioned motives behind the ban and security experts doubt its effectiveness.
They say that laptops fitted with explosives could be activated in cargo holds and many smartphones, which are not banned, could have the same capability as larger devices if there were concerns about hacking into aircraft systems.
Pilots are also worried that large numbers of lithium battery-powered laptops stored in the cargo hold pose a fire risk.
The association's chief executive Alexandre de Juniac said that if governments believe wider curbs are necessary they should consider applying measures to enhance security while avoiding the concentration of devices in holds, the communication says.
That could include the increased use of explosives detectors and sniffer dogs, closer visual scrutiny of devices, the deployment of behavioural detection officers, and the implementation of trusted-traveller programmes to help identify lower-risk passengers, says IATA, which represents 275 airlines.
An association-commissioned survey of business travellers indicated that 15 per cent would seek to reduce their travel in the face of a ban on large devices.
New Zealand is reviewing its security settings but there are few signs of any change in rules here based on the current terror threat.
Security has been stepped up at airports around the world. Photo / Supplied
Emirates pulled back from five of its 12 US destinations in response to weakened travel demand in the three months since Donald Trump took over the presidency.
While reduced capacity helps airlines' yields, this is at a cost to passengers who face fares rising from historic lows if there is a widespread reduction of competition.
The threat from electronic devices is vague but the impact of terrorism on aviation isn't. IATA estimates that attacks in Western Europe in late-2015 and early-2016 reduced European airlines' international passenger traffic by 1.6 per cent costing European airlines more than $3b last year.
Airlines have had high profile failures this year and these will be scrutinised at the meeting.
Last weekend the industry's reliance on technology that works was laid bare.
A British Airways IT meltdown stranded thousands of passengers around the world and left the airline facing compensation claims of close to $200 million by one estimate.
The airline blamed a power supply issue rather than a cyber attack and denied a claim by a union that a decision to outsource hundreds of IT jobs to India last year led to the problem.
In April videos of United Airlines passenger David Dao being pulled from a plane at Chicago after refusing to give up his seat to make way for airline employees went viral plunging that carrier into crisis and causing discomfort for all airlines whose widespread practice of overbooking flights had the spotlight turned on it.
United's handling of the incident compounded the problem which wiped nearly $1.3b in value from its share price in the days following.
The Grand Fiesta Americana in Cancun where the IATA meeting will be held. Photo / Supplied
But the airline business is volatile and a month later United stock hit an all time high. In mid-May its under fire chief executive Oscar Munoz was able to tell shareholders that the incident hadn't affected bookings. He will be part of a panel discussion at Cancun discussing airline turnarounds.
US airlines are back in the black after years of restructuring but other global heavyweights - Emirates, Singapore Airlines and Cathay Pacific - have seen profits plunge this year. Cathay is cutting at least 600 jobs.
In this region Air New Zealand is on a roll. A profit upgrade saw its shares soar yesterday to their highest level since August 31, 2001.
Its chief executive Christopher Luxon is heading to Cancun with his airline having just upgraded its full year guidance as fuel prices aren't rising as quickly as forecast and revenue improving in spite of unprecedented competition.
It said its pre-tax earnings were likely to exceed $525m for the year - an improvement from the $475m to $525m it forecast in February.
Strong inbound New Zealand, growing domestic tourism and high-single digit growth in New Zealanders travelling overseas are propelling the airline.
Its chief strategy, networks and alliances officer Stephen Jones is key to where the airline will fly next and he will also be in Mexico.
The airline is scoping new cities in the United States and South America for "one or two" new destinations for new long range aircraft coming into its fleet.
