This week should have seen more than 80,000 aviation industry professionals assemble for the Farnborough International Airshow, but instead they found themselves reflecting on where the Covid-19 pandemic, which triggered its cancellation, has left the sector. The online FIA Connect event provided that opportunity, and on the foreheads of about 150 panelists in more than 70 webinars it was easy to visualize the burning questions on their minds: how bad will this crisis be, when will it start getting better, what will the dreaded "new normal" look like, and what steps do my colleagues and I need to take to get there?
The consensus was refreshingly candid, built on an expectation that the industry needs to dig in for a recovery more challenging than other crises in living memory, including the first Gulf War, 9/11, the financial crisis of 2008, and the SARS epidemic. Panelists used the term “perfect storm” more than once to describe the grim confluence of steep economic downturn, public health emergency, government travel restrictions, and widespread fear of travel and human interaction itself.
Perhaps the clearest assessment came from the Roland Berger consultancy, which this week issued a report envisioning no prospect of airline capacity returning to 2019 levels until 2024. The company believes that the civil aerospace sector has just about gotten through the crisis-management phase, characterized by painful cost-cutting and job losses.
From now through 2021, it sees a “transition” phase during which it advocates companies should address their strategy with a dispassionate reassessment, followed in short order by course correction. The Roland Berger team said it consciously chose to describe that phase as a transition rather than a recovery, which it does not consider a given in the short term. In its view, this period will see weak new aircraft sales and, potentially, no new aircraft brought to market before the mid-2030s.
However, FIA Connect delivered some glass-half-full sentiment too. For a start, it is clear that the defense and security sectors of the wider industry have not felt the effects of Covid as severely and, indeed, they potentially stand to gain from mounting global tensions.
The industry increasingly views sustainability—the challenge to make aviation carbon-free—as a platform for growth, with opportunities for companies to advance technology supported by significant amounts of government financial support. Panelists presented moves to replace jet-A fuel with electricity generated by renewable means or hydrogen as a welcome foundation for aviation’s future between now and 2050, rather than a distracting annoyance forced on it by a hostile environmental lobby.
Similarly, increased automation of aircraft, leading along a spectrum to increased adoption of fully autonomous flight, now appears an important magnet for investment and an opportunity for companies to get a competitive edge. Roland Berger expects investment in the field to continue despite Covid’s squeeze of cash, albeit at a slower rate than for sustainable technology.
Several webinars delivered an impressive breadth of expertise addressing the potential for profound change right across the aerospace supply chain, as if the Covid emergency has somehow galvanized attitudes toward an urgent need for such shifts. Some speakers referenced disruption to the globalization trend, seeing production moving closer to home. Others saw opportunities for national industries showing the greatest initiative to pull ahead of less agile rivals in a potentially historic shift in the balance of power.
Along with its friendly rival Paris, Farnborough International has long been one of the two truly global air shows. In its diminished FIA Connect format, however, there appeared to be a more self-conscious UK focus as the country’s aerospace industry grapples with the task of reinventing itself in response to the twin challenges of Covid and its Brexit departure from the European Union.
This brought repeated interventions by members of the UK government eager to accentuate perceived opportunity over pitfalls. There were no promises of further specific financial support for the industry, beyond previously announced commitments some speakers compared unfavorably to the much larger amounts pledged by rivals like France.
UK industry group ADS has been diplomatic but firm in its insistence that the government must provide tangible, long-term support for a sector facing a defining and still potentially damaging moment in its illustrious history. The FIA Connect discussions highlighted tensions between cheerleaders bearing slogans and battle-hardened realists looking for substance and resolve.