Guest: Céline Fornaro is Managing Director, Head of the European Industrials team at UBS Securities. She is a trained aeronautical engineer and a member of Chatham House and the Royal Aeronautical Society.
In 2020, the world came to a shrieking halt. Empty airports, deserted roads, and grounded airplanes were the story of 2020 and the beginning of 2021. Now, as COVID vaccines become more readily available around the world, we ask the same question that any child would: “Are we there yet?” Countries are making moves toward reopening, and US domestic and European airlines are seeing a dramatic increase in summer ticket sales. Should the travel industry begin to cheer, or is it a little too soon to call this a ‘win’?
Céline Fornaro, Managing Director, Head of the European Industrials team at UBS Securities, joins hosts Peter Schechter and Muni Jensen on Altamar’s latest podcast episode to discuss the future of post-pandemic travel. Fornaro was a former Managing Director and Head of Aerospace and Defense Equity Research at Bank of America Merrill Lynch and is a frequent commentator on industry topics.
In 2019, the global travel and tourism industry contributed a huge $9.25 trillion to the global economy. With shutdowns, closed borders, and grounded planes, the travel industry’s shortfalls could amount to 2.8% of the world’s GDP. A full recovery is not expected until 2023, according to estimates of the relatively conservative UN Conference on Trade and Development (UNCTAD). Tourism is one of the leading sources of income for many countries. But all nations – big and small – have felt the negative economic repercussions of the COVID-19 pandemic generated by the shortage of travelers.
Vaccine passports are becoming an increasingly controversial issue as governments and companies debate how to make the workplace – and travel – safer. Here again, the US and European countries differ – with Europe actively considering government-sanctioned vaccine passports. “I think one of the first things clearly needs to be a vaccination program that reassures everyone. And if you need to update the vaccination every year and whatever else it takes, it’s important to have communication [and transparency]. [The pandemic has] created anxiety even going into an airport where you say, ‘Okay, how am I going to go with all these people around me? And how do I know that they’re all safe?’” explains Fornaro.
However, there is one aspect of the travel industry that is quickly changing. “UBS shared a report that the use of high-speed trains could lead to zero growth in air traffic between European destinations from 2018 to 2028. Governments should be keen to invest in high-speed rail in Europe given their commitments to net-zero-carbon emissions. How does the green issue and the travel issue intersect?” asks Altamar’s Peter Schechter. “With COVID, the European commission has actually used that in a way to maintain a clear focus on the green deal and investment in among other things: green transport and green energy…COVID has not been used as an excuse to step back for probably the first time in an economic downturn,” observes Fornaro.
The link between climate change and travel is not new. Young activists like Greta Thunberg brought up the issue of ‘responsible travel’ and a new trend called ‘travel shaming’ based off of the Swedish word ‘flygskam’ criticized those traveling by airplane. However, Altamar’s Téa Ivanovic has some thoughts, “I agree that we need to curb emissions, and that climate change is future generations’ single most important threat. But I’m not convinced that shunning travel is the solution…why the criticism only of commercial airlines?” It’s hard to pinpoint the right way to approach the issue of ‘responsible travel.’ However, a mentality is sure to change. Fornaro believes that, after the pandemic, “passengers will consider air travel as a necessity and not as an extra trip, because you’re really going back to visiting your family, your core friends, and probably [also taking some time for] mental health.”
Wonder about the future of the airline industry as it looks for ‘greener’ fuel alternatives? Find out by listening to the latest Altamar episode, available wherever you get your podcasts. You can download the episode here.
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