Economist Warns Aviation Sector: Brace for Slow Recovery Until 2026

The Aviation Industry Association (AINZ) conference in Wellington featured a stark economic analysis from Brad Olsen, an economist from Infometrics. Addressing industry leaders, Olsen highlighted significant challenges facing New Zealand’s economy, including rising living costs, the impact of Trump tariffs, and a sluggish recovery in the aviation sector. His insights underscored the need for the industry to adapt to an increasingly complex economic landscape.

Economic Landscape Affects Consumer Confidence

Olsen emphasized that understanding the sentiments of consumers is vital for the aviation sector. He urged industry stakeholders to move beyond the confines of the Wellington beltway to gauge the broader economic environment. “Last year we told you: Survive ‘til ‘25,” he remarked, reflecting on previous forecasts. This year, however, Olsen has revised his outlook, advising the industry to “stay in the mix ‘til ‘26.”

The economist pointed to the ongoing challenges that New Zealanders face, particularly the escalating cost of living. According to Olsen, these financial pressures have created a climate of uncertainty that has significantly affected consumer confidence. As households grapple with tighter budgets, discretionary spending on travel is likely to remain subdued.

Olsen’s analysis also touched on the lingering effects of tariffs imposed during Donald Trump’s presidency, which continue to disrupt supply chains and inflate costs. These tariffs have had a cascading effect on various sectors, including aviation, making it imperative for industry leaders to navigate these economic hurdles carefully.

Adapting to a New Normal

The economist’s message resonated with attendees, many of whom are keenly aware of the challenges ahead. Olsen’s advice to remain adaptable is particularly relevant as airlines and tourism operators look for ways to stimulate demand in a hesitant market. “Innovation and flexibility will be key in the coming years,” he stated, suggesting that companies should explore new business models and pricing strategies to attract consumers.

Despite the obstacles, Olsen remains cautiously optimistic about the sector’s long-term potential. He noted that historical trends indicate recovery phases often follow periods of stagnation. As the global economy begins to stabilize, he believes that New Zealand’s aviation industry can emerge stronger, provided stakeholders remain committed to understanding and addressing consumer needs.

As the conference concluded, Olsen’s insights served as a clarion call for industry leaders. The path forward may be fraught with challenges, but by staying engaged and adaptable, the aviation sector can navigate these turbulent times and lay the groundwork for a more resilient future.