-Analysis-
TURIN — The process of globalization around the world has largely been held together by the so-called GVCs, or “global value chains.” Many of these chains are now revealing themselves to be rusting, rigid, or otherwise unsuitable for our rapidly transforming way of life.
The most recent addition to the list of deteriorating global chains is that of air transportation: the numbers speak for themselves. Not only have “low-cost” fares experienced estimated increases of 30-50%, but even with fares at their highest, punctuality is at its lowest.
This is to the extent that Eurocontrol, the organization overseeing flights in European airspace, has issued a new warning — following one in April — about challenges for the industry of the upcoming summer holiday season.
The reasons are a mix of global factors: the Ukrainian war has led to the modification of many air routes, and a major NATO aerial exercise last month severely reduced the usable airspace over Germany.
In these more crowded skies, there has been an increase in “clear-air turbulence” caused by climate change and atypical hurricanes, such as the one this week which led to the cancellation of around 400 flights at Amsterdam’s Schiphol airport. It was because of Poly, a type of hurricane never seen before in this season.
Staffing crisis
On the other side of the Atlantic, things are not faring any better. In the days leading up to the July 4th Independence Day holiday, where Americans travel to celebrate with friends and family, 4000 to 5000 flights were canceled.
It is a mass phenomenon that calls into question the organization of airlines and airports.
The average number of people flying worldwide at any given moment is estimated to be around half a million. It is a mass phenomenon that, in addition to climate and politics, calls into question the organization of airlines and airports, which are facing severe staff shortages. This scarcity of personnel extends not only to passenger services at airports and on board, but also – especially – to pilots and technicians involved in refueling.
The staffing issues are partly a consequence of the pandemic years, when companies laid off significant numbers of surplus staff. The same companies continue engaging in the practice of overselling tickets (known as “overbooking”) which is driven by the fact there are almost always people who do not show up for boarding. If everybody does show up, and there is an excess, those passengers receive rushed apologies and are accommodated on a subsequent flight.
Addicted to subsidies
The pandemic was also a moment of massive state subsidies to airlines. The United States provided a staggering billion in aid to airlines, to be repaid at low interest rates over a long period of time. In April-May 2020, Lufthansa was recapitalized by the German government with a generous €6 billion, along with a guarantee on a loan of an additional €3 billion.
However, this did not prevent a significant decline in the level of service: from a glowing example for other airlines to long queues of weary passengers at the company’s counters and hurried explanations for missed connections.
Still in the midst of the pandemic, in 2021, Air France was recapitalized with €4 billion, resulting in the French government holding nearly one-third of the company’s capital. The subsidies provided by the UK to British Airways were lower (£2 billion), but the airline enjoys significant tax exemptions on fuel costs.
Ultimately, this prompted Ryanair — long one of the ‘outsiders’ competing against the old national ‘flagship carriers’ — to take legal action that garnered a victory in its favor three years later. A similar outcome was achieved with the much smaller state aid provided by Italy (€130 million) to airlines holding national licenses, which excluded Ryanair.
These subsidies have sparked the anger of environmentalists, who see them as an encouragement to pollute. There is also a recent tepid experimentation with new, lower-polluting types of fuel.
Lack of long-term vision
In any case, the general chaos at airports which passengers are experiencing practically worldwide is compounded by the confusion surrounding subsidies. These subsidies primarily aim to keep companies alive, patch up holes, and mend the ruptures. Especially in the current post-COVID situation, it could be said that companies are primarily trying to “make money”, to stay afloat – but it is difficult to discern true long-term plans, even from international entities.
Reliable and affordable air transportation is one aspect of our future that should not be overlooked. Relying solely on a ‘pure’ market system has shown that it cannot withstand the shock that can be summed up as: pandemic + climate + war.
And what about the passengers?
The industry lives day-by-day and, generally, has not yet produced those fundamental innovations that ultimately justify its existence. Governments have not behaved any better, as they too have instinctively reacted to emergencies and little more.
And what about the passengers facing uncertain summer travel plans? To paraphrase Shakespeare: they can imagine that “this is the winter of our discontent,” remembering that they are not just passengers, but above all else, citizens.
