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The aviation industry in a post-coronavirus world

Antonio Rodríguez-Laiz

Antonio Rodríguez-Laiz

AERTEC Solutions / Marketing & Communication

Our generation never expected to face a crisis like the one caused by COVID-19. The world had not experienced such a serious setback since the Second World War. This crisis had just one single origin, and yet its repercussions have spared only a dozen countries across the whole world.

On the one hand, it is a health crisis that will last a minimum of two years (with peaks, latency periods, and relapses); but it is also an economic crisis, the duration of which will depend on how well we can prepare and adapt, starting from today. In truth, we all know that, in one way or another, the world will never be the same again.

The picture that is beginning to emerge in the wake of the COVID-19 crisis is not encouraging, but our expertise and experience will allow us to minimise the negative consequences.

The aviation industry has not been immune to the coronavirus crisis, nor will it be immune to its consequences. However, it is still in our power to contain the damage and to be ready to make the recovery as quick and effective as possible.

The current situation is the result of a chain reaction. With emerging evidence of the dangers of a looming pandemic, countries began to restrict the movement of people. Then, some borders were closed. The next step was the lockdown of populations in several dozen countries, and the closure of airports. Airport activity was halted except for emergency flights, transport of supplies, and occasional repatriation of citizens. The entire supporting industry of services linked to airports followed the same trend. Airlines grounded their fleets. Any strategic plans that airlines, operators or airport managers had for renovations or expansion were put on hold.

At the same time, industries were legally forced to stop in several countries where there was a generalised policy for fighting contagion. It was also necessary to put in place the necessary measures to allow operators to work safely in completely new circumstances. In turn, the supply chain followed the same path as the original equipment manufacturers (OEM).

This escalation of events alone has had an impact on the aviation industry amounting to tens of billions of euros.

No budget or forecast made by any company for 2020 could have possibly imagined this scenario. Everything has to be reassessed. Where are we exactly? What lies ahead of us?

Let’s start with air transport. The great difficulty facing air transport following the COVID-19 crisis is that its rate of recovery is not going to depend on itself. It will be the events taking place in different regions around the world that will set the pace for improvement and encourage the movement of people. In the context of tourism, for example, in the short term it is not clear which destinations around the world will allow leisure activities like those that took place before the crisis, without any restrictions or limitations constraining the number of travellers. Undoubtedly, for many areas the top priority will be protecting their own population, which is likely to affect the type of activities allowed and limit the gathering of people, along with many other aspects of tourism. What most experts do agree on is that domestic tourism will come first, and that it will take months before international destinations begin to recover.

Furthermore, business travel is going to decrease in the future, and is unlikely to return to past levels. The world has changed. The health risks posed by the movement of people in enclosed spaces and the restrictions that will be established in many destination countries will be decisive factors that will have to be taken into account. To this we must also add the experience arising from the forced adoption of teleworking in many different companies, most of which have overcome the challenge with surprising ease and top marks. Few expected that not only would the productivity of their companies not decrease, but that it would sometimes even increase. The possibility of holding all kinds of meetings remotely will now always be the first option to be considered. During this period, even seminars, congresses and presentations have revealed the new possibilities offered by their taking place remotely. Consequently, the number of business passengers is likely to decrease compared to those that existed before COVID-19.

The return to normality will be slow. Airlines that manage to overcome the crisis will not initially schedule the same capacity and frequency of flights as before the crisis, because the demand will not justify it, especially on international flights.

As a result, it is likely that there will be an oversupply of aircraft on the market, meaning the demand by airlines for rental, leasing and purchase of new aircraft will drop.

With regard to the aeronautical manufacturing industry, the forecasts presented in 2014 by the two major manufacturers in the sector, Airbus and Boeing, which covered a period of 25 years and which, until February of this year, were being scrupulously followed, have suddenly become completely worthless.

Aircraft manufacturers have already announced a reduction in the rate of production of some of their models in order to adapt to the drop in demand.

Airbus took advantage of the communication of its sales and delivery figures in the first quarter of 2020 to announce its decision to reduce the production rate of some of its aircraft by approximately 30%, in view of the new forecasts following the COVID-19 pandemic crisis. Some strategic decisions, such as the conversion of the A380 assembly line in Toulouse into an A321neo assembly line, have also been put on hold for the time being.

The situation at Boeing is similar. It has already announced a reduction in its production along with several different lines of work in order to address the future of the company in the present landscape. The measures implemented include an incentive for voluntary redundancy. In their case, the start of 2020 was already weighed down by everything that occurred around the 737MAX model, which, to make matters worse, was set to recover as of May.

Many motivational talks are making use of a speech given by John F. Kennedy in Indianapolis in 1959, in which he said: “In the Chinese language, the word ‘crisis’ is composed of two characters, one representing danger and the other, opportunity.” Although some Chinese linguists reject this literal translation, it is a good starting point for those who seek to convey that hard times are a good opportunity for adaptation and improvement.

Could the aviation industry view the extraordinary crisis we are experiencing due to COVID-19 as an opportunity? It might be more accurate to view it slightly differently: as the industry’s necessary adaptation to an unprecedented scenario.

Health safety will become the highest priority for passenger experience in the future. This will affect the whole chain, from aircraft design to the organisation of tourism at the destination. The work of adapting to this new situation will affect infrastructure, space design, mobility, services, processes, procedures, training, management… There is a lot of work ahead.

However, we have a choice to make: we can do this work thinking only of the industry’s basic survival, or we can make the best of it and consider this an opportunity to completely renew and improve what we already have.

 

 

 

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