Market solution better than regulatory moves: IATA Chief Economist

Forum Gandhi | Updated on: Jun 28, 2022
Marie Owens Thomsen, Chief Economist, IATA

Marie Owens Thomsen, Chief Economist, IATA

Marie Owens Thomsen dwells on what ails, and aids recovery in Indian aviation

Marie Owens Thomsen, Chief Economist at the International Air Transport Association (IATA), believes that government intervention should be minimum in the aviation sector as otherwise there would be long-term relative underperformance of economies.  Thomsen spoke with BusinessLine on the sidelines of IATA’s annual general meeting in Doha. Excerpts:

You said that Asia will be the slowest in recovery. Why? 

China and Japan are the markets that are impacting the Asian market recovery. Luckily for India, the restrictions are not that much; however, the overall region recovery gets impacted because of China. Till the time we do not see a complete recovery in the Chinese market, we will not see a recovery in the Asian market. Wouldn’t it be wonderful if India could be the counterweight to that lull? 

What is your view on the Indian aviation market in this context? 

The main variable escalating or slowing the industry in the current scenerio is the travel restrictions, so India is rather blessed in this context. If you look at other countries like Mexico, they never had any travel-related restrictions. In Asia, Vietnam and Middle East [West Asia], which are having the least restrictions, are the leaders; so this is in favour of India.

What are the challenges for India in the coming times?

In a funny sort of way, the global markets and local markets tie together. The key point is to get everyone to work together, and we need people to work together.

Historically, without being rude, there are certain countries that have a tendency for state intervention that has not always been successful. Not only India, France and Japan are other examples that have a lot of desire for state intervention. I would argue as a free-market economist that this has contributed to a long-term relative underperformance of these economies, so one would hope that, in this difficult environment, there could be a change in favour of market-driven solutions and (that) this receives light in India. 

What is your view on the economic health of Indian airlines? 

This is a profound question, and... sorry to bring it into a general stance than staying local... value chain is important, when airlines are in the middle with no pricing power, so monopolies and oligopolies on the supplier side, so to speak, and hyper transparency, instant price discovery of all the customers... I cannot think of any other industry that has that. 

What is your view on the current rise in fuel prices and the taxes levied by the Indian government? How will this impact the recovery of Indian airlines? 

This is a really complex question. Of course, the simple answer is ‘not good’. There is a temptation on the part of the government to remove the taxes; however, in a more holistic view and in line with the current conversation about sustainable fuel prices, it’s not all bad. Perhaps this could help the industry and climate sceptics come on board and that would be the ultimate solution. 

Published on June 28, 2022
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