[SINGAPORE] The International Air Transport Association (Iata) is on the lookout for players in the aerospace industry attempting to profiteer by using trade tariffs to justify price hikes.
The industry has not been subjected to tariffs because of an agreement in 1979, Iata director-general Willie Walsh noted at a media roundtable on Wednesday (Jul 16).
Some engines and airframe manufacturers are facing tariffs when they import raw materials for their production, he said, but they can recover such taxes when they export. To them, it is a cash flow rather than a cost or profitability issue.
“And we need to be careful that people are trying to take advantage of the perceived impact on tariffs to increase prices when there’s no real justification for that,” said Walsh. “That’s something that we’re watching very carefully at Iata.”
Walsh is in Singapore to attend a series of high-level aviation meetings this week. He spoke on a wide range of topics at the roundtable, including the future of the budget carrier model.
In April, US President Donald Trump slapped “reciprocal” tariffs on the country’s trading partners; he then paused the implementation of these taxes, before announcing their re-imposition on some trading partners last week.
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Walsh said: “I think if tariffs are applied, it will have an impact without question. I think you’ll see airlines reluctant to take delivery of aircraft while there’s uncertainty around the tariffs, and the impact that would have on the cost of aircraft.
“It’s not just going to be a major Boeing and Airbus issue, with an impact on all aspects of the aerospace industry and have an impact on most, if not all, airlines as well.”
Walsh thinks that tariffs should not apply to the industry, given that it is one of the US’ biggest exports. Both Boeing and GE Aerospace export products in “significant” quantities, and there is a very strong trade surplus in this sector.
Separately, Iata has been sought by some members to look into inflight thefts, amid a spate of organised crimes on board some Asia carriers.
While such crimes are not common across the global network, a number of airlines have now raised concerns over an observed increase in thefts. They have therefore asked Iata to collect statistics to gauge the magnitude of the problem. “So that’s something we will be working on,” said Walsh.
