As an industry that is worth 3.6% of the global economy and supported 65.5 million jobs worldwide, the aviation industry is an incredibly important part of the global economy. And it has been and will be for a while, going through dramatic changes.
According to the
airline body IATA, passenger numbers fell 60% and the industry lost around $126
billion last year during the pandemic. However, this situation was subject to
change. “The
industry recovers to 2019 levels of traffic by the end of 2023, early 2024” says Darren
Hulst, the vice president of commercial marketing at Boeing. The US aircraft
maker claimed that 43,610 new commercial aircraft will be needed by 2040, which
has a combined value of $7.2 trillion.
There are some
obstacles on the way to recovery. Due to factors such as travel restrictions
imposed by the governments and intense political tensions, long-haul international
routes would take more time to recover. Moreover, the lack of a coordinated global
approach has made international travel, even state travel difficult. In other
words, having a common set of travel rules is a key component to full recovery.
Although some efforts have been made in Europe by introducing the vaccine passport,
the majority of the other countries and regions in the world still impose different
quarantine requirements and have their own approach to monitor the vaccination
status and.
Other than changes
made subject to the pandemic, the aviation industry is changing geographically
as well. China is predicted to replace the United States as the world's biggest
aviation market along with the rise of China and the Middle East. In addition, the
aviation industry is becoming more sustainable. Though slowly, there have been
efforts made towards reducing fuel usage and carbon dioxide of air travel in
response to the crisis of climate change. The International Council on Clean
Transportation (ICCT) predicts that at most, 5.5% of aviation fuel in the EU
could come from sustainable sources by 2030.
9 comments:
Pandemic resulted in irretrievable circumstances in the economy. Airlines industries have lost billions in revenue and had to cut the number of their employers. It is terrible to understand that it would take three more years for Boeing to return to pre-pandemic levels. I can easily imagine that China will be a global leader in the aviation market due to the progress of China in past decades. Compared to other countries, China had a positive GDP growth in 2020, which tells us a lot about it.
Boeing is a very interesting company to look at, it is one of the most influential companies in the United States being in the Dow Jones and dominating the aviation industry. There is not a very big market outside Boeing and Airbus. As mentioned there are obstacles such as certain countries putting restrictions on people that can enter (only vaccinated people) that restriction may keep airline traffic lower if people refuse to get the vaccine. Another obstacle that I think may occur is the obstacle of the increase in the use of zoom. Many companies have stated that they have no plans to return to the office because they have tools that they can use to meet such as zoom. If more and more companies adopt this mindset business meetings in person may decrease significantly. Any sort of international business meeting or domestic business meeting that needs to be attended via air travel may be done through zoom. Although with that being said, the VP of Boeing gave a pretty generous time table giving Boeing about 2-3 years to return back to pre-pandemic levels which is a significant amount of time that they can recover due to their strong market share.
I think the aviation industry is definitely in need of some innovations. First of all, the world is changing rapidly on a daily basis due to the rising tech industry. The invention of zoom offered a great alternative for individuals and businesses to reduce travel costs. Besides, data shows that people are traveling less and less internationally. The reason could be that the era of globalization is coming to an end and countries are imposing policies to be more closed up. Last but not least, along with the advancement of the rocket industry, humans are getting closer and closer to their dreams of traveling by using other more efficient transportation methods.
There is no doubt that the global pandemic put a halt on travel leaving airlines scrambling. The numbers have clearly started to pick back up again, but the question is will they ever truly reach the levels that they once were at pre-pandemic. The pandemic made companies rethink the way that they do things. I know that my mom used to fly to a city somewhere in the country once a year for a company sales meeting where they would stay in a hotel three nights have round trip flights, and 3 meals a day, all of which was paid for by the company of course. That is over $1,000 a person for three days. For the last two years now they have stayed home and done the meeting online. They have given their employees a $40 allowance a day to buy food, snacks, drink, etc. They have clearly saved a lot of money doing that and I believe a lot of other companies are having the same experiences. This will no doubt have an impact on the airline industry. It will be interesting if they will need all 43,610 new aircraft by 2040.
Worldwide recovery from this pandemic might be slow as vaccine roll out remains low for many parts of the globe. Ultimately, lagging global immunity from COVID-19 will make it harder for airline companies to get back to the level of business they experienced in 2019. Also, new variants could continue to pop up as the virus is given more chances to mutate with every new case.
Plus, people's habits to choose to fly might be set by this pandemic for some people. Even when this pandemic is not an active threat anymore, consumers may be reluctant because their behavior to avoid airplanes during COVID-19 may create a built in habit for the future to not fly.
2024 seems far away but we will have to see what the world is like by then.
It is very interesting that you chose to look at the aviation industry, and how long it seems it will take for Boeing to recover post pandemic. I did a project where I was tracking the growth level of American Airlines stock over the span of a semester. With the availability of the vaccine, I had assumed that the stock would go up, as travel begun to open again. However, it only went down because of the immense amount of loans AA has had to take, as well as the continuous research happening on the vaccines. The stock even correlated to when certain side effects of J&J were coming up. This shows how fragile the industry is, and how many factors it depends on.
I also agree with the lack of global planning as well as the onset of Zoom and facilities that allow people to connect otherwise too. The industry requires new innovation.
I find it interesting that we are still talking about CO2 emissions from Air Travel, even though it only accounts for nearly 2.5% of total global CO2 emissions. Of course, the amount of emissions is much higher than what we perceive from a percentage, but it is important to note that air travel is an industry whose benefits outweigh the damages caused from it. It can be compared to collateral damage, in simpler terms. I'm not intending to downplay the emissions from air travel, but it is important to focus on bigger problems related to the industry.
One area that has to improvise is aircraft manufacturing, because a lot of resources, like metal, plastic, fabric, and others are used to manufacturing airplanes. A study that I can't seem to find, said that more emissions are released during procurement and manufacturing of an aircraft than what it produces in its entire life of flying.
Another industry is the recycling industry. There are thousands of aircraft currently sitting around in aircraft graveyards, waiting for their turn to be dismantled and recycled or reused. Many aircraft become unusable/unrecyclable during this period of sitting around. A lot of the interior parts are reused in newer aircraft, but the bulk of wires, cables, chassis, etc. are left to wear in the weather. The ship recycling industry also suffers from the same issues, just that each ship has to wait longer but a lower number of ships are sent in for recycling. There is not a credible estimate for how much this industry produces emissions, but the number is comparable to the manufacturing process emissions.
Gosh this comment became unnecessarily long.
I also forgot to add that freight companies need a complete rehaul in their routing methods. My parents sent a package from India, which I have been tracking on the DHL website. The package, destined to the university, landed in Cincinnati after leaving India, for customs check. Here, what is closer? Columbus or Germany? Columbus. But DHL thinks Germany is closer, or maybe it is its policy to route all parcels through its main German hub. But, think about the additional carbon emissions due to that additional miles flows. This might be overthought, but other parcels waiting for departure from Cincinnati to Germany could have taken the space my package took. This doesn't make any sense to me and is just absurd in my opinion. If anyone has a reason as to why freight companies do this, let me know.
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