The International Air Transportation Association (IATA) has released a document that aims to quell anxiety that Turkey’s current currency crisis will affect the global aviation industry.
In the document, IATA states that ‘global risks appear small’ and if the crisis does not spill into a serous geopolitical conflict, the market should remain stable.
According to IATA: “The ongoing currency crisis in Turkey suggests that the economy and air passenger market are set for a volatile period ahead.
Moreover, the sharp fall in the lira in recent weeks – and many other emerging market currencies – will only exacerbate upward pressure on US dollar-denominated airline costs such as jet fuel.
Provided that the Turkish crisis remains relatively contained, as we currently expect, the direct risk to aviation at a global level appears relatively small.
However, recent developments are a reminder that any shock from the emerging world will have a much bigger impact on global aviation now than it would have done in the past”.
A combination of tight diplomatic relations with the US and economic reliance on capital inflows – foreign investment borrowing for domestic assets – has led to the fall in the lira and the ongoing crisis.