THE International Aviation Transport Association (IATA) has warned that an escalation in global trade tensions could soften an otherwise strong outlook on passenger and freight demand
THE International Aviation Transport Association (IATA) has warned that an escalation in global trade tensions could soften an otherwise strong outlook on passenger and freight demand. 'While a full-blown global trade war does not form part of our central outlook, it represents an important risk,' said the IATA analysis.
In a recently released research note, IATA Economics says moves towards global trade protectionism are not positive for air transport, however at this stage the impact appears to be minimal, reports London's Flightglobal.
'The overall scale of the economic damage depends on both the extent and the severity of any tariffs and other restrictions that are put in place,' said the IATA report.
US tariffs on steel and aluminium have had minimal impact on air freight as those goods rarely travel by air. The 10 per cent tariffs on car parts and semiconductors made in China are of concern as they are goods usually shipped by air. However, the value of most exports into the US of those goods come from Canada and Mexico, and thus the impact on air freight is less.
Nonetheless, IATA sees a 'key risk' for air freight if an escalated trade war leads firms to reconsider their supply chains, potentially reinforcing the trend of 'reshoring' that has been ongoing since the 2008 global financial crisis.
IATA concludes that the overall impact of the current trade war is unlikely to have much impact on the industry, but an escalation could have a material impact on freight and passenger markets. Much of that will rest on which measures are taken, and if it turns from a bilateral trade war into a global one.
