
Are war clouds looming over India-Pakistan border?
Section: Politics
The recent changes in U.S. tariff policies are beginning to have noticeable effects on the aviation industry. As travelers become hesitant to book flights, airlines around the world are expressing concerns about future business prospects. The ongoing trade tensions, particularly between the U.S. and Europe, could further complicate matters if tariffs are extended to aircraft and aircraft parts.
At present, the U.S. has implemented a new base tariff of 10% and special tariffs of 25% on automobiles, auto parts, and steel and aluminum. However, a World Trade Organization agreement from 1980 currently exempts civilian aircraft and aircraft components from tariffs. Industry representatives are advocating for the continuation of this agreement, emphasizing its importance for maintaining stable supply chains.
Industry expert Maria Latorre from Euler Hermes has noted a troubling trend: many individuals are choosing to forgo air travel due to rising concerns about the economic outlook in the U.S. and inflationary pressures. This has led to a projected slowdown in both inbound and outbound tourism, particularly affecting interactions with China and Europe.
The Lufthansa Group has yet to disclose specific details regarding its main market, the North Atlantic, ahead of its upcoming quarterly report. However, during its annual report in March, the airline's CEO indicated stable booking figures and high ticket prices, particularly among U.S. customers. In contrast, Condor Airlines mentioned that its booking trends remain within expected parameters.
Within the U.S., there are signs of reduced demand for domestic flights as inflation prompts consumers to tighten their budgets. Consequently, major U.S. airlines have adjusted their forecasts downward, with some refraining from issuing profit predictions altogether. Additionally, Virgin Atlantic Airways has reported a decline in bookings for its long-haul flights between the U.S. and the U.K.
One of the most pressing concerns within the industry is the potential disruption to supply chains that are vital for manufacturing modern passenger aircraft. According to Euler Hermes, Airbus relies on a network of over 2,000 suppliers, while Boeing works with approximately 345, many of which are located abroad and may be subject to tariffs. The interdependence between European and American aviation manufacturers is significant, with production processes often requiring multiple cross-border transactions.
Even without the imposition of new tariffs, passenger jets have become increasingly scarce following the pandemic, resulting in fewer available flights and higher ticket prices. Boeing, in particular, is facing significant delays in deliveries due to manufacturing and certification issues, leaving many airlines eagerly awaiting new aircraft. In contrast, Airbus has an overwhelming backlog of orders that is ten times its annual production capacity.
In a related development, reports indicate that China has instructed its airlines to refrain from taking delivery of Boeing aircraft and sourcing aviation equipment or components from U.S. companies. This situation could favor China's own aircraft manufacturing efforts, despite the fact that many components for these new planes still originate from Western suppliers. Industry leaders have expressed concern that tariffs between the U.S. and Europe would primarily benefit competitors, ultimately undermining the West's competitiveness.
As of the start of the year, Lufthansa had 242 firm aircraft orders on its books, with 101 of those jets sourced from Boeing, including 15 completed Dreamliner models that are currently awaiting certification in Seattle. There are internal discussions regarding the possibility of relocating these jets across the Atlantic or importing them through Switzerland to avoid potential tariff increases.
Ryanair, a major customer of Boeing, remains optimistic that tariffs will not be imposed on its contracted aircraft deliveries, which are expected to include 330 Boeing 737 jets by 2034. The airline has stated that switching to Airbus models is not a viable option due to the full order books of European manufacturers. Similarly, Delta Air Lines has made it clear that it will not absorb any tariffs on Airbus aircraft that it has ordered.
While many airlines are wary of the impending tariff situation, there may be unexpected beneficiaries in this turbulent landscape. EasyJet's new CEO has expressed hope that increased passenger traffic in Europe will occur as travelers reconsider their U.S. trips. The airline is well-positioned, having partnered with Airbus and avoided reliance on American suppliers for its engines.
Section: Politics
Section: News
Section: Politics
Section: Health Insurance
Section: Health
Section: Health
Section: Politics
Section: News
Section: Business
Section: Science
Health Insurance in Germany is compulsory and sometimes complicated, not to mention expensive. As an expat, you are required to navigate this landscape within weeks of arriving, so check our FAQ on PKV. For our guide on resources and access to agents who can give you a competitive quote, try our PKV Cost comparison tool.
Germany is famous for its medical expertise and extensive number of hospitals and clinics. See this comprehensive directory of hospitals and clinics across the country, complete with links to their websites, addresses, contact info, and specializations/services.
Join us for an exciting evening of jazz at the EMMAUSKIRCHE on Sunday, May 25, 2025, from 19:00 to 20:30. Experience fresh sounds from the talented young jazz quintet led by Anton Sigling from Harlaching. This group features award-winning musicians from the Federal Competition 'Jugend jazzt' and...
No comments yet. Be the first to comment!