Cautious European airline leaders have so far seen no negative effects from the policies of US President Donald Trump on the lucrative transatlantic passenger market, although they are continuing to keep a close eye on trends.
Speaking during the A4E Aviation Summit in Brussels on 27 March, the chief executives of the three big European airline groups agreed that forward bookings between Europe and the USA were tracking in line with expectations – for now.
“Many of us, as well as our American competitors, are not seeing anything as of today,” says Air France-KLM chief executive Ben Smith.
Nevertheless, Smith describes the situation as “concerning for us”, adding that the group continues to study developments “very, very closely”.
That concern partly comes from the risk factors that have ramped up in recent weeks – and the real-world impacts of the Trump administration’s actions in some airline markets already.
Those risk factors include falling confidence among US consumers in the world’s largest economy, which has already had an impact in domestic leisure markets in particular, prompting a number of US carriers to downgrade their earnings expectations for the first quarter.
And with the US administration instigating trade wars and showing hostility to key allies, there is a concern that European travellers, for example, might choose to fly – and do business – elsewhere.
The impact of Trump’s rhetoric and tariffs on neighbour Canada offers an indication of what might be to come; OAG data shows that as of March, forward bookings between Canada and the USA are down 70% year on year in every month through to the end of September.
Still, the chief executive of British Airways and Iberia owner IAG, Luis Gallego, concurs that no negative effects of the Trump administrations actions are feeding through to its markets so far. Third-quarter demand on the transatlantic, for example, is tracking “in line our forecasts”, he says.
“And I think American carriers, they don’t see the impact in the transatlantic business; they see weakness in leisure domestic demand but not in the transatlantic business,” he adds.
Lufthansa Group chief executive Carsten Spohr meanwhile suggests that the transatlantic markets might transcend political tensions.
“How do you measure the transatlantic relationship?” he asks. “I think we measure it in people actually interacting with each other.”
Spohr points out that there will be “more passengers on the transatlantic than ever” in the coming summer.
“So let’s not be misdirected from the obvious strains we have on the transatlantic relationship, in political terms, defence terms and also… in economic terms, but in terms of really measuring people… interacting, visiting friends and relatives, spending vacation on the other side of the Atlantic.”
That part of the relationship “has never been healthier”, he insists.
