Aeronautics in 2022

Reading the plethora of articles announcing the “takeoff” of the aeronautics industry since mid-2021, one may have been inclined to think, when we rang in the New Year, that the episode of grounded planes due to the pandemic and the associated economic impact were behind us. The fact remains, however, that many factors could still impact the altitude we’ll have reached by the end of the year. Here’s a blip on the radar of some scattered ideas to keep in mind before pulling back on the yoke.

It’s never a good idea to fly planes empty

In early 2022, some airlines, and not small ones, are flying planes empty so they don’t lose their gate slots. Apart from the natural questions this raises in terms of regulations, energy expenditure and environmental impact, it’s above all a strong indicator that we’re far from being back to normal.

The most profitable flights won’t be the ones that fill up first

In May 2021, the International Air Transport Association (IATA) estimated that passenger load would reach 88% in 2022. Then Omicron hit and analysts are now predicting a rate of 75% by the end of 2022. Admittedly, this is much better than in 2020-2021, but it hasn’t been that low since 1994.

It’s mainly domestic or low-cost flights that will see a return to steady activity. International demand likely won’t exceed 44% of what it was in 2019. We’re still far from being back to normal.

Similarly, we can expect that business customers will be slower to return to the airport. On the one hand, companies have learned to telework and may be tempted to continue limiting travel to recoup some of the extra costs associated with the pandemic, while claiming an environmental benefit to be credited to their Corporate Social Responsibility. On the other hand, business flights are often booked very shortly before departure and therefore become highly complicated by protocols requiring prior testing or isolation periods, especially when it comes to international travel.

Not all destinations will be worth it

The impact of the pandemic is very different from one area to another. The United States should fare well because, even with a less-than-ideal vaccination rate that could impact international travel, the high volume of domestic traffic should allow for a fairly swift rebound.

While Europe is slightly worse off, it should also see a recovery due to a good vaccination rate and the introduction of the European Digital Covid Certificate, a health passport that will make travel within Europe much easier.

Asia, on the other hand, may struggle to recover, particularly due to low vaccination rates.

In times of uncertainty, everything can be cause for concern

This may seem anecdotal or worthy of dubious conspiracy theories, but periods of instability tend to bring back unresolved issues, such as the potential impact of 5G on the C-band used by airlines. Whether they turn out to be truly significant or not, these issues will nonetheless be time-consuming at a time when the players want to go full throttle again.

Meanwhile, the zero-emission hourglass is still flowing

Although in 2019, airlines pointed out that commercial aviation accounted for only 2.4% of CO2 emissions, most of them have committed to a neutral balance sheet by 2050. Two-thirds of this objective will be achieved through the accelerated development of sustainable aviation fuel (SAF), which is currently made from vegetable oil, but which should quickly be replaced by waste-based production.
This would be perfect if this fuel didn’t currently cost four times more. If SAF is to become widespread in the timeframe set to meet the 2050 deadline, we can expect a significant increase in ticket prices. This will reduce traffic, especially for low-cost airlines, which we thought would be the fastest to take off again. Will they have time to rebuild their cash flow by then, or will they have to forget about their environmental objectives?

This said, it may not be necessary to make sure there’s a life jacket is under the seat because above the cloud cover mentioned earlier, we have to admit that the sky seems to be clear in 2022.

This said, it may not be necessary to make sure there’s a life jacket is under the seat because above the cloud cover mentioned earlier, we have to admit that the sky seems to be clear in 2022.

Many new players are launching

Some analysts argue that as many as 130 new start-ups are expected to launch between mid-2021 and the end of 2022, in particular because the pandemic has led to a sharp reduction in operational costs and the purchase price of aircraft. At least 40% of these new companies are expected to be based in Europe.

Manufacturers’ order books are far from empty

New orders are arriving regularly, especially as low-cost airlines multiply and gain market share. The new airlines are mainly buying Airbus A320, Boeing 737 and Airbus A330.

By the end of 2022, Airbus should almost catch up with its 2016 production levels, and finally go back above the 2019 level around 2025.

With China’s approval of changes to the 737 MAX program, Boeing is expected to strongly boost production to catch up on the backlog of orders. However, especially because of the delay in the 787 program, Boeing will only be able to return to 2019 levels after 2025, losing some ground on its main competitor.

Cargo flights are benefitting from the boost in e-commerce

The congestion of Chinese ports contributed to an unprecedented surge in cargo flights in late 2021. There too, manufacturers are benefitting from an influx of orders, particularly for the Boeing 777F and the Airbus A350F.

Slimming down… or not

It’s hard to believe for this industry, but for once, it seems difficult to go with the flow. We thought that widebody aircraft had been forced to hit the air brakes in favour of long-distance flights in narrowbody aircraft, such as the Boeing 737 or 757 or the Airbus A321LR or A321XLR, in which flight attendants’ carts barely fit between the two three-seater rows.

Of course, the narrowbody will be used for the vast majority of our trips to vacation destinations under palm trees, but the Superjumbo jet could well take advantage of the generalized takeoff to get off the ground again, with several companies having recently announced new destinations for the A380.

Does eVTOL mean anything to you?

In a blog dedicated to innovation, it’s tempting to wonder if this confusing period will prove to be a real opportunity for electric vertical take-off and landing (eVTOL) aircraft; that is to say, drones, flying cabs and other variants that could well capitalize on the ground stopover imposed on the sector in 2020 and the steady recovery expected this year to take advantage of the updraft.

Because the technology is ready and travellers have been cut off from what they’re used to, a window of opportunity may well have opened. Especially since the introduction of urban electric mobility or drone deliveries during lockdown has given the concept some pretty good press.

Financial restructuring

Finally, since this period obviously had a major impact on the finances of all the players, once bankruptcies and restructurings are over, whatever the outcome, the financial situation of all the players will be healthier. This should restore the confidence of customers, suppliers and future investors.

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