“Sometimes we need the fog to remind ourselves that all of life is not black and white.”

Alan Caruba

The aviation industry has come to a grinding halt after an excellent run for over two decades, when passenger travel had more than doubled. The industry witnessed promising trends powered by numerous factors such as rising travel class due to increase in income levels, ageing population, rise in leisure travel, growth in connectivity, globalization, and technology. However, the growth seen in the aviation industry was not uninterrupted.

Before looking at the uncertain road ahead, it’s important to see if one can learn anything from the past. Especially from how resilient the aviation industry has been in overcoming some of the bumps and speed breakers it witnessed during these two decades.

While air travel continues to be the safest mode of travel, one of the biggest challenges for this industry has been outbreaks and epidemics. First it was SARS in 2003, Avian flu in 2005 and 2013, and then MERS in 2015. The impact of most of these epidemics has mostly been regional, with the largest impact caused by SARS, especially in China, with APAC airlines taking around six months to bounce back. However, the worst phase was during 9/11, which had a profound impact on the aviation industry around the world. There were some permanent changes to the industry both in airports as well as aircraft, and took almost two years to get back to the pre-9/11 level.

Economic drivers that kept the industry afloat

So why is this industry resilient, bouncing back higher with every such incident? While there are many reasons, the following are the top-three underlying economic drivers:

1. Increasing world trade in a connected global economy
2. Increasing spending power and the human quest to meet people and visit places
3. A number of new fuel-efficient and long-range aircrafts

Respond, adapt, and reinvent

For now, the industry will surely hunker down and focus on survival. Air travel is showing early signs of recovery but is still 90% less than last year. While there are limited opportunities for some time, here are six areas technology and solution providers can play to help their customers as well as their own company to respond, adapt, and reinvent for the times to come:

1. Lower cost of maintaining parked aircraft and efficiently bring them back to operations when demand picks up

   More than 16,000 aircrafts—out of the global fleet of 30,000—are parked today. Airliners are not just losing revenue from these expensive pieces of equipment, they are incurring costs to follow maintenance guidelines. There is also limited manpower and MRO (maintenance, repair, and overhaul) capacity available around the world. I am sure airlines can benefit from efficient and proven remote diagnostics and fleet management solutions that can prompt them to only focus on items that need service. This space will see a lot of innovation by airlines, OEMs, and MRO companies.

   
2. Bio-security: Airports and airlines will have to increase passenger confidence on health safety so they are ready to fly again. 9/11 hit a reset button on how security is viewed by the global aviation industry. Thanks to COVID-19, the aviation industry would now see another layer of bio-security added to airports’ protocol. Airlines must work on touchless check-in for boarding, while airports must work on detection, screening, testing at the perimeter and monitoring solutions for the airport. Digitization in the aviation industry will enable contact-tracing to control any outbreak.
3. Health safety inside aircraft: Airlines must go a step further to reassure passengers that it is safe for them to fly in their planes. This will require creative solutions to change existing seat configuration, disinfect high-touch areas such as lavatory door handles, overhead bins, etc. The industry would also need disinfectant solutions and technologies to turnaround an aircraft after deplaning passengers as well as to react to any health safety situation that may arise inside the aircraft.
4. Faster adoption of digital technologies: While the aerospace industry would cut down manufacturing and other discretionary spend, there will be an acceleration in their investments into digital technologies that will make them more resilient, provide better visibility into their business, and minimize the impact of COVID- 19. They will continue to take advantage of a WFH model, a more digital and flexible manufacturing and supply chain set up, and a more efficient engineering environment to support virtual product development, etc.
5. Supply chain reset: It has been observed that many companies are struggling to keep their operations running during this pandemic because their supply chain was inflexible or broken. Beyond the impact of COVID-19 on the aviation industry, exposing vulnerabilities of some of the countries, there would be political dynamics that would dictate companies to reconsider other destinations, including bringing back a lot of manufacturing to their home countries. This will require a more responsive supply chain platform and support from engineering and operations to find alternatives.
6. Alternate business models: There are 5000+ airlines in the world, but only the top-30 have strong financials and credit rating. The same stands true for the aerospace industry as well. The current situation will surely force a lot of consolidation and the need for risk-sharing partners that can help them with short-term liquidity. This presents an opportunity for entrepreneurial companies with a diversified portfolio and strong balance sheet to offer alternate business models to their customers in this industry.

The world has not seen anything like COVID-19 in the recent past and experts across the globe acknowledge that these are unprecedented times. The distress and destruction it has caused to the aviation and aerospace industry is deep and wide. However, the underlying economic drivers are the source of optimism for the aviation industry. There is no better alternative to air-travel to cover long distances in a safe and efficient manner. Teams, Zoom, and virtual tourism can supplement human experience, but cannot replace actual human interactions. The world will not reverse into islands of broken economies.

That’s why I say, yes, the flight is delayed but it will surely take off, will make up for the time lost, and will reach its destination on time. Those that can respond quickly, adapt well, and reinvent themselves, will come out stronger on the other end.

The flight is delayed but it will surely take off, will make up for the time lost and will reach its destination on time

References:

1. https://www.economist.com/business/2020/03/15/coronavirus-is-grounding-the-worlds-airlines
2. https://www.iata.org/en/iata-repository/publications/economic-reports/what-can-we-learn-from-past-pandemic-episodes/
3. https://www.iata.org/en/iata-repository/publications/economic-reports/covid-19-cost-of-air-travel-once-restrictions-start-to-lift/