00:00Great to see you again, John. So, you previously warned that airlines were enjoying a sweet spot of strong post
00:06-pandemic demand.
00:08Does this risk puncturing that recovery story, or is the industry now structurally more resilient than in past geopolitical shocks?
00:16I think the industry is substantially more resilient.
00:19Of course, this has been a wipeout of activity for particularly the major Gulf carriers, Emirates, Etihad and Qatar Airways,
00:28and indeed a number of other airlines in the region.
00:31Certainly, learnings will come from how the pandemic was handled.
00:36This, of course, is not an infliction on humanity in the way that virus was.
00:42This is a man-made military activity, and of course, we don't know how long it will last.
00:47But the key thing is these Gulf Hubs have become absolutely fundamental parts of the 21st century global infrastructure.
00:54They are essential for particularly east-to-west travel flows, for example, from around Europe through to Asia and Australasia.
01:03People have become used to going via one of the Gulf Hubs and indeed flying more and more to destinations
01:09such as Dubai for tourism.
01:11So it's a major shock to that system. We're talking about half a million passengers a day, usually going through
01:17those three airports.
01:19How quickly do you think the higher oil prices feed into things like ticket prices, inflation and consumer confidence in
01:26travel worldwide?
01:28Of course, oil is notoriously volatile in pricing levels.
01:31You get the kind of spiking that we're seeing now.
01:34There have been higher levels.
01:35I mean, who knows where the oil price goes in the coming days.
01:38But I think airlines, again, have become more resilient to that kind of shock.
01:42Also, at this particular point in time, when we're coming from a reasonable period of quite low oil prices,
01:48many sizable airlines and well-founded airlines financially have hedged large amounts of fuel for the year ahead.
01:57We just heard in the last week, for example, IAG, the major European airline group, talking about high hedging levels
02:03in excess of 70 percent.
02:05So that insulates them not completely, but substantially against those fuel price cost increases on day-to-day spot markets.
02:14I don't think we're going to see dramatic changes in ticket prices for that reason right now.
02:19China's only recently seen a strong rebound in outbound and inbound travel.
02:23Could renewed instability in the Middle East derail that momentum?
02:27And how significant is the Chinese travel now in sustaining global airline and tourism revenues?
02:34I mean, of course, it's going to have an immediate effect in terms of people asking questions about safety and
02:40security.
02:40But many other examples we've seen in recent years and indeed further back tell us that recovery does come.
02:47And what we need to now see is a rapid stabilization of the political military situation in the region.
02:56We see already today Emirates and Etihad are operating some repatriation flights.
03:01But again, Dubai is a good example.
03:03Coming out of the pandemic, renewed confidence very quickly by showing that it could reassure passengers then about security in
03:10terms of health concerns.
03:12And I'm sure they'll be doing the same again now in the context of this military conflict.
03:18China, as you said, in a very different market, it has shown a big rebound in outbound travel.
03:25I think that demonstrated the wish of Chinese travelers to go and explore new parts of the world,
03:31indeed to visit maybe friends and family from the Chinese diaspora living in other parts of the world.
03:36But I think that will continue as well.
03:38The market is resilient.
03:40People have a hunger to travel once they have a reasonable degree of confidence about safety.
03:45And certainly, as I said, the airlines, the authorities will be at pace to make sure that is communicated clearly
03:51as quickly and logistically as possible.
03:53John Strickland, thank you as ever.
03:55Thank you very much.
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