Four years on from the last Farnborough International Airshow, the global aerospace and defense community looks ready and eager to reconvene for the 2022 event, despite the reality of an incomplete recovery of its equilibrium after an unplanned hiatus. Whether the industry will continue to sit in a prolonged Covid-inflicted holding pattern before getting back to a comfortable cruise altitude or whether the experience has permanently changed it for good or ill remains a lingering question.
Show organizers last month acknowledged that as recently as January doubts remained about whether the pandemic could yet disrupt this year’s exhibition. They said the uncertainty had resulted in a slower build-up to the event, as exhibitors generally took longer to firm details of their plans for showcasing their wares.
Then, in late February, just when the trepidation appeared to be lifting, the industry—and indeed the global economy—suffered another blow when Russian President Vladimir Putin violated his neighbor’s border and invaded Ukraine. The move sent already soaring inflation and supply chain issues into hyperdrive, and aviation found itself sucked into the vortex. That said, chronic global instability seems likely to reap as-yet unspecified benefits for the defense side of the business.
While airline traffic has recovered faster than many predicted with healthy post-Covid demand, staff shortages resulting largely from the misjudment have disrupted schedules and inflated fuel costs have suppressed margins. Aerospace manufacturers also face pressures, even as demand for civil aircraft bounces back from the lean years of 2020 and 2021.
Presenting the latest data for the UK industry last month, ADS senior economist Amie Stone said that aerospace output levels as of April 2022 stood at about 40 percent of February 2020 levels. “The skills shortages and supply chain challenges, as well as the rising cost of doing business, are still barriers to the resurgence of growth,” she commented.
Still, total 2021 revenues for the UK aerospace business (which ADS estimates consist of 78 percent civil and 22 percent defense) totaled £22.4 billion ($27.3 billion). Unsurprisingly, the pre-Covid 2019 total of £35.9 billion dwarfed the 2021 total.
Perhaps more worryingly, UK aerospace exports declined over the period from £34.2 billion to just £15.2 billion. Revenues for member companies of France’s GIFAS industry group totaled €55.2 billion ($57.7 billion) in 2021, with exports accounting for €37.3 billion of that total.
Some believe that the British export decline has more to do with the self-inflicted obstacles to trade resulting from the UK’s Brexit decision to leave the European Union in January 2020. However, ADS says it adjusted its methodology and data sourcing techniques to the extent that the latest figures don't necessarily compare on a like-for-like basis, and that the adjustment accounted partly for the drop in exports. Stone told AIN that the lower output levels during Covid accounted for the wider dip in revenues.
Nevertheless, the group acknowledged the impact of Brexit. “The new requirements of Brexit are something that ADS members have been working with since 2020 and there was a long lead up to the changes in requirements and regulation, during which members prepared themselves the best they could,” Stone said. “Of course, there are new costs and challenges to a degree associated with exporting and doing international trade, but newer supply chain issues and disruption and the impacts of the COVID-19 pandemic far outweigh issues of Brexit—particularly when they are two scenarios for which industry had no preparation time. For example, logistics rather than manufacturing are often the key challenge and driver shortages and border checks play into this.”
ADS views the urgent need to decarbonize aviation and ensure it represents a massive investment opportunity for an industry now seeking a clearer path to recovery. Unsurprisingly, sustainability will be one of the key themes of the 2022 air show.
Show organizer Farnborough International, which ADS owns, indicated in late June that it expects the 2022 event to roughly match the 2018 show in terms of exhibitor numbers (around 1,000) and trade visitors (between 70,000 and 80,000). As of July 6, the static and flying display list showed 52 aircraft, including anticipated highlights such as the Airbus A350-900 widebody airliner and Boeing’s 737 Max 10 narrowbody. Military standouts from the list include a pair of F-35 fighters, one operated by Britain’s Royal Air Force and the other by the U.S. Air Force.