ADS Advance – The Aviation Industry in 2021

Image courtesy of Avia Solutions

In light of the critical challenges posed by the COVID-19 pandemic, global airlines have continued to implement and adapt to the ensuing rapid changes in the international aviation industry.

ICAO has worked alongside other industry players to develop strategies for monitoring and managing the associated impacts of the pandemic. This has allowed the industry to closely monitor the impacts associated with COVID-19 across the various sectors.

Throughout 2021, the passenger business segment of most airlines continued to experience weak returns. In particular, the industry noted a decline in the rate of passenger travel, with global revenue passenger kilometers (RPK) falling to 26% in 2021 compared to the RPK value of 50% for the year 2020.

In comparison, demand for private jet charters has continued to increase dramatically. More and more people see private travel as a flexible, unrestricted and low-risk alternative to commercial airlines. Available reports indicate that demand for charter travel has increased by more than 53.5% to reach a new record of 4.2 million private jet flights this year.

Against all odds, the air cargo industry remained strong for many airlines in 2021, recording a remarkable 13.1% growth in cargo tonne-kilometres (CTK) worldwide. This figure exceeded World Trade Organization projections, which estimated an 8% increase in global aviation trade in 2021.

Airfreight activity also benefited from unusual situations, such as that experienced in the Suez Canal in April 2021. Following the blockage of the canal, the resulting stranding in the waterway disrupted global supply chains by stopping the movement of goods between trade hubs in countries in the Middle East, Asia-Pacific and Europe. This increased the demand for air cargo services as the market sought alternatives to deal with the resulting blockages and delays.

In another industry development, airlines like Qantas and British Airways have retired some of their iconic planes. This decision stems from the need to compensate for sustained financial losses by reducing maintenance and storage expenses. Affected aircraft include older classic models such as the Airbus A320, B757 and B767.

Meanwhile, major airlines exit 2021 as better performers compared to their smaller counterparts. While major airlines have put in place mechanisms to make up for sustained revenue losses, smaller airlines have had no choice but to rely on government cash injections to stay alive.

Estimated government spending in the global aviation sector from the onset of COVID-19 through the last quarter of fiscal year 2021 is $180 billion. However, some stakeholders say increased government support for airlines has created an unfair playing field in the aviation industry.

While underlying fundamentals remained weak throughout the year, the aviation industry saw no major mergers or acquisitions in 2021. This is a positive signal that global airlines are gradually emerging from the crisis of COVID-19 and are no longer considering “integration agreements”. ” as a last resort to stay afloat.

Given the financial damage caused by COVID-19, the aviation industry cannot ignore the financial implications of the pandemic on the human factor – its workers.

Some airport-based workers and pilots have had their working hours reduced, others have been laid off, and some have lost their livelihoods altogether due to layoffs. Reported data indicates that more than 58.5% of airport-based workers in Europe have lost their jobs in the past year due to the current crisis.

The industry has also seen accelerated digitalization, with global airlines actively pursuing technology-backed innovations. Artificial Intelligence (AI) and Augmented Reality (AR) technologies have played a vital role in optimizing airline operations. Currently, more than 97.2% of airlines are targeting big data and AI, and 76.6% are capitalizing on these technologies to develop cognitive learning initiatives.

Airlines have moved away from legacy infrastructure and started adopting cybersecurity systems and hybrid cloud infrastructures. These technologies have provided new ways to address persistent security risks, reduce inefficiencies in data processing and management, increase agility, and build high performing systems.

Additionally, the aviation industry has moved towards integrated and Aerosafe training methods. Today there is a growing emphasis on online training through Zoom and Google Classrooms, with current figures showing more than a dozen online courses compared to less than five two years ago.

The issue of sustainability has remained at the center of ongoing negotiations among aviation stakeholders. The pandemic has placed more pressure on airlines to follow the path of greening to achieve the sustainability agenda. The industry has mainly focused on decarbonizing the aviation sector and promoting investment in green technologies.

Looking ahead, global airlines anticipate an optimistic recovery scenario despite the current uncertainties that have overwhelmed the entire aviation industry. IATA predicts the industry will continue to incur losses of up to $12 billion in 2022, a 78% decline from losses incurred this year due to COVID-19-related effects.

Industry experts fear, however, that if the COVID-19 crisis drags on, it will result in the entrenchment of habits, promoting alternatives to air travel such as virtual business practices. These practices can further complicate recovery processes.

On the positive side, the adversity of COVID-19 has forced airlines to innovate, accelerate their efforts towards sustainability and think creatively, which, if done correctly, can ultimately translate into improvement. performance, greater transparency and increased profitability.