What lies ahead for the aviation sector in 2021 and in the medium term? Like many other sectors of the economy, aviation in general is assimilating the onslaught of the health crisis caused by Covid 19. After months of total restriction due to the pandemic, the slow and conditional resumption of commercial flights in mid-2020 opens up some interesting prospects.
In the following lines we will review the current situation of the aeronautical activity and some projections of its operability in the medium and long term.
Current outlook for the aeronautical sector in 2021
It is clear that aviation is one of the sectors hardest hit by the coronavirus crisis. The mandatory shutdown of commercial flights in the first months of the pandemic led to a dramatic drop in passenger traffic in 2020. This drop was estimated by the International Air Transport Association (IATA) at 66%. Taking into account the operational normality during almost the entire first quarter and the controlled resumption after the suspension. Which compared to the 2019 results in the aforementioned indicator, allows understanding the impact of this unpredictable global crisis.
Among the options to remain operational, commercial airlines turned to carrying cargo as a palliative to compensate for the absence of passengers. They even made their units available for repatriation flights.
Flights resumed in the middle of last year with capacity limitations and strict sanitary protocols for aircraft. However, restrictions and mandatory quarantines continue to be in place in many countries for travelers from potentially at-risk locations. In addition, pandemic flare-ups and strain variations tend to reduce the number of routes that airlines typically cover. Both on domestic and international routes.
This situation has become apparent in Europe. Particularly in countries such as the United Kingdom and Germany, which have stopped encouraging their citizens to travel to Spain with restrictions or PCR tests upon arrival. At the same time, other countries in Europe, Asia, Africa and America apply similar measures to travelers coming from Spain.
Covid 19 and ripple effect on the rest of the airline industry
These measures make users think twice before choosing air travel as a means of getting around. While a significant percentage of travelers decided not to take any flight until they saw a reduction in the risks of contagion in aircraft.
As if this were not enough, the airline industry has suffered a decrease in the number of flights and passengers, and this loss has had a domino effect on other players in the airline industry. In particular, airports and service providers associated with the activity have reduced their operations during this period. Another consequence of this situation is that airlines have slowed down orders for new aircraft to renew their fleet. As a result, manufacturers and their suppliers had to limit their production. Seen in this light, the aviation sector in 2021 faces demanding challenges to crystallize its recovery.
Business aviation, the booming segment
For its part, business aviation also recorded a significant decline, around 62% up to May 2020, compared to the same period in 2019 in Europe alone. The following month, however, it began to recover to account for 24% of the flights made in the region in June. In other words, one in five aircraft flying through European airspace belonged to private aviation. Never before had this segment reached such a high share.
In fact, this demand for private flights was to be expected in view of the cancellation of commercial flights for so many months. Also, many users perceive business aviation to be safer as a measure to prevent the spread of Covid 19. Specifically, this belief is due to the fact that there is greater control over the number of passengers and conditions for social distancing in the cabins. Moreover, its operation in private terminals avoids the agglomeration of people in closed spaces. For all these reasons, it is very likely that business aviation will be the segment with the greatest prospects for recovery within the aeronautical sector in 2021.
Prospects for aviation industry recovery in the short to medium term.
IATA recently noted that it will be 2024 before commercial aviation recovers to 2019 productivity levels. Even so, the International Monetary Fund estimated for 2021 an encouraging recovery of global GDP, which could amount to 5.4%. This represents a rehabilitation opportunity for many sectors hit by the pandemic. Among them, the aeronautical sector.
On the other hand, the report 2021 Aerospace and Defense Industry Outlook, by the consulting firm Deloitte, forecasts that this year commercial aviation will experience an upturn. However, it will be approximately 40% below pre-Covid 19 pandemic levels. The document also states that new aircraft deliveries will increase by 34.3%, from 670 in 2020 to 900 in 2021.
Similarly, Deloitte states that the pandemic did not affect technological development in the area. So we can surely appreciate advances that will improve the future of the aeronautical sector in 2021, such as:
- Advanced Air Mobility. This initiative is being developed jointly by industry partners and official entities such as NASA and the FAA. In essence, the project consists of the creation of urban air mobility vehicles (UAM), also called air cabs, or electric vertical take-off and landing vehicles (eVTOL). The addition of more players for this purpose in 2021 will accelerate the testing and commercialization phases.
- Electric propulsion. In parallel, advances in hybrid and fully electric-powered aircraft continue. Thus, in 2021 we could see the first experimental flights with these technologies.
- Hydrogen-powered aircraft. European aircraft manufacturer Airbus has already announced that it is working on hydrogen-powered aircraft, and other manufacturers are expected to follow suit.
Encouraging forecasts from Boeing and Airbus
Apart from all this, experts linked to the aeronautical activity dare to affirm that the aeronautical sector in 2021 will begin to meet the growth forecasts predicted by Airbus and Boeing and face new challenges in the sector after the crisis caused by Covid 19. In brief, these are:
Worldwide flights will total 50,660. In broken down form, these transfers, with their service market value, would correspond to:
- North America. 10,930 flights, corresponding to 1.865 billion dollars.
- Europe. 9,340 flights, 1.980 billion dollars.
- Russia and Central Asia. 1,940 flights, corresponding to $270 billion.
- Latin America. 3,380 flights, $500 billion.
- Africa. 1,620 flights, about US$215 billion.
- Middle East. 4,030 flights, $790 billion.
- Asia Pacific. 19,420 flights, corresponding to 3.480 billion dollars.
In terms of demand for specialized personnel for commercial aviation in the world, this will reach in 2038:
- 550,000 pilots. Of which 41% will be required in Asia Pacific, 21% in Europe and 13% in North America.
- 640,000 technical specialists. These will be distributed among 41% in Asia Pacific, 21% in Europe and 12% in North America.
While the demand for aeronautical services will grow by the indicated year in:
- North America. with $1.865 billion (+2.8%).
- Europe. 1.980 trillion dollars (+3.3%).
- Asia Pacific. 3.840 billion (+5.1%).
All this seems to confirm that the aeronautical sector is heading towards a more favorable scenario than the one experienced in 2020.