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Sensemaker: Turbulence ahead?

Sensemaker: Turbulence ahead?

What just happened

Long stories short

  • The first draft of an agreement from Cop26 called on countries to “revisit and strengthen” 2030 targets by the end of next year.
  • Mostafa Baluch, Australia’s most wanted man, was arrested crossing a state border in a shipping container. He had allegedly cut off an ankle bracelet designed to track his location.
  • An original Apple I computer cased in Hawaiian koa wood fetched $400,000 in auction. Only 200 were made, and when they first went on sale in 1976 they cost just $666.66.

Turbulence ahead?

When Donald Trump first imposed a travel ban on people coming from the UK to the US, 72 people had died from Covid across the two countries. On Monday, twenty months and nearly 900,000 Covid deaths later, Virgin Atlantic and British Airways planes took off from parallel runways in Heathrow in a rare show of solidarity. Transatlantic air travel is back, and not a moment too soon for Thanksgiving celebrants and carriers desperate for their custom.

What are the new rules? Dozens of countries including the UK, China and most of the EU, had been banned from travelling to the US with limited exemptions for US citizens, their immediate families, and green card holders. After months of uncertainty, flights are now open to fully-vaccinated international travellers, provided they have a recent negative Covid test.

How are airlines feeling? Joyful, to a point. Virgin CEO Shai Weiss called it a “day of celebration”. BA CEO Sean Doyle described it as a “critical turning point in the recovery of aviation”. It’s no wonder when both carriers are heavily reliant on transatlantic travel. The jewel in the crown is the Heathrow–JFK route, the highest grossing in the world, from which BA generates $1 billion a year in revenue. But the road to recovery may be slower than airlines like. Flight bookings to the US next month are only 18 per cent up on last December, and capacity is still well below pre-pandemic levels (Norwegian has given up on long-haul flights altogether).

The financial holes that airlines are in are pretty deep, even if not many went to the wall due to the pandemic (Flybe collapsed, but was in trouble before Covid – and is set to fly again). Virgin had a pre-tax loss of £659 million in 2020 against a £22 million loss in 2019. IAG, which as well as BA owns Iberia and Aer Lingus, reported a £6.4 billion loss against a profit of £2.2 billion the year before. Airlines across the world kept afloat during the pandemic by – among other things – borrowing cash, cutting workforces, carrying cargo, taking government aid and restructuring their businesses. In a way, it’s a remarkable tale of survival.

What could change for good? Airlines want a work-and-leisure bounce back, but 1) a rise in remote working, 2) the cost and inconvenience of testing, 3) lingering nervousness about Covid, and 4) the disease itself all stand in the way. It’s hoped 2, 3 and 4 become lesser concerns in time, but 1 is the great unknown. Business travel is worth $1.4 trillion annually, and is where airlines really make their profits. But the chief of Star Alliance, a global network of 26 airlines, told the FT earlier this year that he expects a third of business trips to disappear. Not everyone is so pessimistic. A savings glut might encourage more leisure travellers to go it in style anyway.

And isn’t there a 5)? Yes, the climate. Airlines can’t ignore the fact that the transatlantic reopening is happening against the backdrop of Cop. British Airways created some good PR by powering its first flight to the US with the help of sustainable aviation fuel made from used cooking oil, and by offsetting all the emissions from the flight. But that distracts from a more existential battle: where airlines want investment to help them decarbonise, most climate activists want to stem their growth as well. Customer behaviour might help decide who wins out, and beyond anecdote and self-reported surveys it is difficult to figure out to what extent people are shunning flights due to environmental concerns. A McKinsey questionnaire from 2019 found 54 per cent of fliers were really worried about climate change. But only 31 per cent planned to reduce their air travel. There’s clearly some appetite left for flying: the first planes that took off from Heathrow were packed.


Belonging identity, society, beliefs, countries

Meta changes
Facebook’s parent company, Meta, plans to restrict ad targeting that’s based on user interactions with content related to race, ethnicity, religion, sexual orientation, political preference and other traits. Given most of Meta’s revenue comes from targeted advertising, it’s a significant move. But it’s also a long time coming. Micro-targeting has long been used in nefarious ways, from advertisers pushing body armour in far-right groups ahead of the US Capitol riots to Facebook allowing housing adverts that screened out Jews, Spanish speakers and people interested in wheelchair ramps. Two questions: 1) what does this mean for small political groups that target different demographics in good faith and to raise money? And 2) will advertisers just bypass restrictions by using more tenuous proxies for sensitive characteristics?


New things technology, science, engineering

Steeling a living
A metallurgist in Washington state pleaded guilty to fraud after spending decades faking the results of strength tests on steel castings used to make US submarine hulls. Between 1985 and 2017, 67-year-old Elaine Marie Thomas falsified results for more than 240 production batches from the foundry at which she worked – partly in the belief that some of the testing requirements were “stupid”. There’s no indication any of the hulls failed, but it’s alarming that it took well over three decades for someone to spot discrepancies in data that are meant to demonstrate how submarines might fare in a collision. When the US Justice Department confronted Thomas with the fake results, she responded: “Yeah, that looks bad.”


The 100-year life health, education, living, public poliCY

NHS vaccine mandate
Frontline NHS workers have until April to be jabbed against Covid or lose their jobs. That leaves 103,000 workers – 7 per cent of the NHS workforce – in the firing line. It’s a complex issue, balancing risks to patient health posed by unvaccinated workers against risks caused by potential staff shortages. But Sajid Javid’s decision to set a spring deadline splits the difference and may end up pleasing no one. NHS leaders sought that deadline to let services deal with winter pressures. But it’s precisely those pressures that make unvaccinated workers transmission risks here and now, especially when Covid cases are high and immunity is waning. Unfortunately there are already more than 90,000 vacancies in the NHS – and so no easy solutions.


Our planet environment, natural resources, geopolitics

A question of degree
The world is on course for 2.4 degrees Celsius in temperature rises by 2100, according to the Climate Action Tracker’s analysis of Cop26 pledges. But last week the International Energy Agency said the climate pledges agreed could limit warming to 1.8C. So what accounts for the 0.6 between the two? In short: can kicking. IEA’s estimates were based on the full implementation of short-term and long-term goals including India’s pledge to hit net zero by 2070, while CAT analysed the path the Earth would be put on by short-term 2030 targets. Distant promises are easy to make, immediate pledges taxing to implement, so it’s clear why governments prefer the former. But hypothetical targets might struggle against looming reality.

Also, check out an extraordinary BBC play-by-play of how 300 volunteers spent 54 hours rescuing an injured caver from Ogof Ffynnon Ddu – a Welsh cave system that stretches 274 metres below the surface. Traversing underground waterfalls and enormous chasms, the team finally got the man out at 8pm on Monday evening. People below ground communicated with those above the surface “through a system called ‘Cave Link’ which allows messages to be transmitted through rock via the water particles in the limestone”. Remarkable.


Wealth investment, fairness, prosperity

The neverending deadline
It’s been at the back of our minds for a few weeks, but the embattled property developer Evergrande approaches another deadline today – for an overdue $148 million bond payment. The Chinese firm, which has debts of more than $300 billion, avoided defaulting twice in October and has continued to make payments sometimes in ways that mystify outside observers. They see a company with no cash and a lot of unfinished apartments. Evergrande has been able to raise $144 million in the past few days by selling its stake in HengTen, a film production and streaming company. But it appears to be operating on borrowed time. The highly distressed prices at which its bonds are trading suggest investors still expect a default. Meanwhile, other property developers in China face mounting troubles of their own. This still has a way to run.

Finally, a correction: Yesterday we wrote that Mark Harper is the current Tory chief whip, and that he “press-ganged MPs into effectively voting against Paterson’s suspension”. In fact, the current chief whip is Mark Spencer. Mark Harper is the former chief whip, voted against the government last week, and told parliament that “if the team captain gets their side – from backbenchers to senior ministers – into difficulty when they get something wrong, they should apologise”. As we are doing now. We’re sorry for the mistake.

Thanks for reading, and do share this around.

Xavier Greenwood
@XAMGreenwood

Edited by Giles Whittell and produced by Xavier Greenwood.

Photographs Getty Images