Increasing number of Monkeypox infections will not result in the same disruptions that COVID-19 created for the aviation industry, says IATA official. For now, airlines are facing more fundamental issues related to the sector. Image Credit: Bloomberg

Dubai: The chances of travel disruptions brought on by monkeypox infections are minimal, according to a top official at IATA, thus dispelling the concerns among many that it would lead to the same restrictions on flights that COVID-19 brought on.

"From what we have seen so far, monkeypox is not highly contagious,” said Kamil Al-Awadhi, IATA's Vice-President for Africa and Middle East. “The reason it's spreading in Europe is because the smallpox injections were stopped years ago there. It's not Coronavirus 2.0 - it's not going to be the same because airlines and airports have taken precautionary measures.”

As of Thursday last, the World Health Organization (WHO) has received reports of 257 confirmed monkeypox cases and about 120 suspected cases in 23 nations where the virus is not endemic.

Awaiting ‘real’ growth

Although Middle East airlines will get closer to pre-pandemic passenger numbers by end-2022, the aviation sector will only return to growth mode once the industry’s global concerns are resolved, according to the International Air Transport Association official. Airlines in UK and US have been cancelling hundreds of flights as they face severe staff shortages and, in some cases, because of tech problems. Two days ago, the British low-cost carrier easyjet announced that it will cancel more than 200 flights for a 10-day period due to airport delays and other restrictions.

Airports, manufacturers, and MRO are “suffering from staff shortages because they laid off a lot of staff and they can’t fill these positions up really quickly,” said Al-Awadhi. Although airlines in UAE and the Gulf have been able to ramp up hiring relatively quickly, they will still face issues when flying to affected markets.

“They have to operate to a destination that does have this problem,” the IATA VP added. “So, it still does not matter if the airport they operate out of has adequate control – the hub they operate to also needs to be able to support this growth. Even if you are ready to operate double or triple capacity, the destination you are going to might not be ready.”

Fuel price impact

Al-Awadhi said Gulf airlines, despite being based in some of the world’s biggest oil producing countries, will still be hit by the spike in fuel prices. “The fuel prices in Saudi Arabia and Kuwait are higher than average and that applies to the local carriers – you don’t have two different prices,” said Al-Awadhi. “They are paying the same price as everybody else, there’s no advantage to be a GCC carrier.”

As of May 27, jet fuel prices in the Middle East and Africa region stood at $151 per barrel, compared to $160 in North America and $163 in Europe. Oil prices went past $120 per barrel on Monday, with the EU agreeing to ban a large portion of Russian oil imports.

Thanks to COVID-19, most regional airlines did not have hedges in place. Hedging is a common practice in the aviation industry where carriers agree to buy fuel at a fixed price for a certain period, protecting them from any sudden increases in crude oil prices.

“Because of Covid, there are far less airlines hedging currently,” said Al-Awadhi. “There are a few airlines that have hedged wisely, and they are profiting from that.”

Supply deficit

With the return of travel, airfares are higher by 10-30 per cent from 2019 levels and most industry experts are blaming it on the lack of available capacity in the market. There’s a reason why airlines are in no hurry to make more seats available. In pre-pandemic times, airlines could operate a route for months at a loss, but now, they must ensure profitability every single time, said Al-Awadhi.

“As a result, the flight frequencies and connectivity have gone down and that means the supply and demand are not equal,” he added. IATA had previously said that airlines could end up registering a bigger-than-expected loss in 2022 due the high oil prices. The industry body’s previous estimate of a loss of $11.6 billion was based on $78 per barrel jet fuel price.