2020 and 2021 have undoubtedly been difficult years for the aviation sector. Hopefully, things are now improving. The pandemic has caused unprecedented, continued disruption globally. In Europe and the UK, Brexit has made things even more uncertain. What changes can we expect as we leave 2021 behind and head into 2021?
GUIDES FOR AVIATION
Bringing the pandemic under control
With the Omicron variant raging at the start of 2022, it’s clear that the pandemic is far from over. The threat of further virus variants remains, and there is still much uncertainty over the resumption of flight activity in many regions. Hopefully, though, the situation should improve during the year.
Vaccination is progressing, which should help ease travel restrictions. There are considerable variations in vaccination rates around the world, though, which will hinder international operators. Airlines now have more experience planning and scheduling flights in the ‘new’ environment. Many airlines enter 2022 with more appropriate staffing and fleets.
Improvement in airline operations
Just looking at aviation in Europe, overall traffic was down 64% in January 2021 compared to normal levels (according to flight data from Eurocontrol). However, by December, it was down only 22%. In total, 6.2 million flights operated in Europe in 2021, compared to 5 million in 2020 (and remember, the start of 2020 was ‘normal’). Recovery in US domestic markets has been faster, and it is predicted to reach 92% of pre-pandemic levels by the end of 2022 (according to research from consultancy Bain).
Caution is needed, though. The aviation industry is used to planning and scheduling capacity far in advance. Airports slots operate using a well-defined system of two seasons, allocated and negotiated well before the season. This does not work well with high levels of future uncertainty. With the constant changes in government rules, passengers will continue to find it hard to plan and commit. Cargo too will continue to be affected by uncertainty and changes in passenger operations.
Airlines forecasting lower losses
To understand how bad 2021 was for airlines, consider their losses. According to IATA, overall losses globally are estimated to be US$51.8 billion in 2021. 2020 was even worse. Losses for that year are estimated at a shocking US$137.7 billion.
The situation looks set to improve in 2022. Again based on IATA forecasts, overall losses this year should reduce to US$11.6 billion. US airlines are predicted to return to profit. This improvement is supported by expected increases in traffic – especially international – as well as improved fares. Stemming losses will also be helped by the operational and fleet changes many airlines have made over the past two years and through reduced uncertainty for passengers.
Growing interest in air cargo
2021 saw a significant rise in cargo activity globally and record-high rates. This was driven by several factors, including the disruption to passenger services (which also carry cargo), high prices and long delays in sea freight, and the expedited growth in e-commerce globally.
Cargo demand has grown throughout 2020 and 2021. Just at the end of the year, IATA reported a 9.1% increase in air cargo demand in September and a further 9.4% in October.
With this rising demand, many operators have been converting passenger aircraft to freighters. This has enabled additional cargo revenue by utilising aircraft not needed for passenger services. There have also been many orders for Boeing 777F and the newly confirmed Airbus A350F freighter aircraft. These conversions and orders will likely increase throughout 2022 as the same factors remain in play.
Increasing use of private aviation and aircraft charters
Private aviation has always offered benefits in privacy, flexibility, and time. With disruptions to commercial services, these benefits have appealed more, and this will undoubtedly continue into 2022. The use of private jets increased significantly in 2021 in many regions. Forbes predicts this growth will continue, and the overall private aviation market will emerge from the pandemic 5% to 10% bigger.
In the cargo market, aircraft charter is proving more popular too. Rising costs and uncertainty in availability and duration has seen more users turn to private hire. During the pandemic, the UK based Air Charter Service reported cargo charter demand up 150% during the pandemic. With the cargo situation worsening towards the end of 2021, this is not changing any time soon.
A continued movement towards green operations
The past few years have seen significant shifts in environmental awareness in the aviation industry. A commitment to cut overall emissions by 50% before 2050 (based on 2005 levels) will continue to drive airline change and future commitment. This will be at the forefront of many decisions made by airlines going forward.
We are unlikely to see any major changes to commercial aircraft or technology. Developments, including electric and hydrogen power, will continue but remain small scale or experimental. They will take time to become mainstream. Increasing use of Sustainable Aviation Fuel (SAF) and associated increasing supply chain is likely. Passengers will become more aware of airline’s SAF commitments too, which is already driving change.
Launch of new airlines
With adversity comes opportunity. Despite the challenges and uncertainty in the industry, there are always those looking for the next market opening. Many existing airlines have significant financial problems, including legacy debt and pensions commitments. Second-hand aircraft are easy to find. And perhaps most unusually, passengers normal travel patterns and loyalty has been thrown into turmoil.
In Europe, PLAY and Norse Atlantic Airways have already started service during the pandemic and are expanding. In the US, David Neeleman’s latest airline, Breeze Airways, has done the same. More are on the way, and we may see further announcements in 2022. Flypop is getting ready to operate its Airbus A330s to India from the United Kingdom. US-based Northern Pacific Airways also hopes to start service in 2022 from its Alaska hub.
Progress towards the new Airbus A321XLR and Boeing 777X
New aircraft are the most visible evidence of progress and change in aviation. Two upcoming aircraft are highly anticipated by airlines and the industry – promising not just the latest technology but changes in the way they operate. These will not enter airline service in 2022 but will get much closer and feature more in airlines plans.
The Airbus A321XLR will take the range of a narrowbody aircraft further than ever before. This opens up new possibilities for using narrowbody aircraft on longer point to point flights. The aircraft is set to take its first flight in 2022.
Boeing’s newest aircraft, the Boeing 777X, will also get closer to service. This promises increased efficiency and higher capacity than any previous twin-engine widebody. It is well into testing and should hopefully see airline use in 2023.
Restrictions and uncertainty from COVID-19 will continue well into 2022 and likely far beyond. The industry has adapted, though and will do so again. There is much to look forward to in 2022 – from both changes to overcome pandemic disruption and changes that have been underway for some time.
- Eurocontol volumes: https://www.eurocontrol.int/sites/default/files/2022-01/eurocontrol-think-paper-15-2021-review-2022-outlook.pdf
- Reuters / IATA: https://www.reuters.com/business/aerospace-defense/iata-sees-sharp-fall-airline-losses-2022-2021-10-04/
- Bain: https://www.bain.com/insights/air-travel-forecast-when-will-airlines-recover-from-covid-19-interactive/
- Forbes market prediction: https://www.forbes.com/sites/douggollan/2021/07/30/private-aviation-set-to-emerge-5-to-10-bigger-post-covid/?sh=58bbb2612eba