By Stephen Wright
High inflation is a bigger downside risk to the global travel recovery than the capacity constraints airlines currently face, Auckland International Airport’s chief executive says.
The airport, which is an international gateway for New Zealand and the South Pacific, has taken a conservative view of the pace of recovery, reflecting New Zealand’s slower reopening from the Covid-19 pandemic and economic risks, Carrie Hurihanganui told The Wall Street Journal. .
“It’s not transitory inflation — which is kind of what the position was four or five months ago and we’ve all acknowledged that’s not the case — does it start to bite (in spending) and therefore our trajectory, does it start this? to decrease or not,” she said.
Central banks have scrambled to raise interest rates this year as rising inflation threatens to take root in the economy. Prices for commodities and daily consumer goods have risen around the world due to stimulus policies caused by the pandemic, global shipping disruptions and Russia’s war against Ukraine.
The International Air Travel Association has predicted that global travel will reach pre-pandemic levels in 2024, but there are some significant regional variations within this forecast.
Asia has been slower to reopen than Europe and North America, and New Zealand is six to nine months behind some major markets, Ms. Hurihanganui, who became CEO of Auckland Airport in February after senior roles at Air New Zealand Ltd. and in the banking sector. industry.
“Ultimately we are optimistic,” she said. “We’re certainly not trying to be too humble, but some of the conditions have changed since those other markets had a head start.”
Airlines, which cut staff and put a significant portion of their aircraft into storage in response to Covid-19, have had trouble meeting demand as borders reopened. Recently, some have had to slow capacity recovery, in part due to staff shortages as Covid-19 continues to cause illness.
“The capacity issues will resolve themselves. It’s a matter of time how to get the planes out of the desert and revive them, it’s hiring and training the staff,” said Ms. Hurihanganui. “The biggest question or downside risk potential is inflation: as it bites, as people’s mortgages go up, as those things hold over the next six months.”
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