Everyone in the aviation industry is feeling the short-term effects of Covid-19. But there are reasons to hold out hope for the medium-term prospects for PMA, and those reasons follow-on from the current Covid-19 crisis.
Aviation is important to the world’s economy. IATA has stated that by value of goods, 35% of international trade is flown by air, 57% of international tourists travel by air and each airline job contributes to 24 more in the wider economy. And the current Covid-19 crisis is having a tremendous negative effect on aviation. For example, the latest IATA figures predict a potential revenue loss by European carriers of $76 billion US Dollars. In Europe 2020 passenger demand (measured in Revenue Passenger Kilometers) is projected to be 46% below 2019 levels. A4A hasn’t yet predicted the full results impacting the US air carrier market but Congress has predicted that it will take tens of billions of dollars in airline support just to keep the airlines in business.
For aviation, I expect the post-Covid-19 world to resemble Post 9/11 America, in that fear will continue to influence decisions long after the threat has passed. For this reason, I expect post-Covid-19 leisure travel to be slow in returning to previous levels.
During the Covid-19 crisis people are using delivery and online services more and, because of convenience, I expect that usage to continue after the threat of Covid-19 passes. This may have a continued effect of maximizing usage of cargo carriage, which may partially offset slow recovery in passenger traffic for some carriers.
I expect air carriers to economize in much the same way that they did after 9/11. Air carriers will never sacrifice safety, and this limits their options for economizing. After 9/11 this meant a surge in the purchase of FAA-PMA aircraft parts, which are approved by the FAA and thus maintain the same or better level of safety; but because these parts create competitive parts markets (changing previously monopolistic markets) they typically have the effect of dramatically lowering costs in those sub-markets. I expect to see a similar surge in PMA usage/purchase in the post-Covid-19 world.
This isn’t just my own wishful thinking, I have spoken with a number of air carrier representatives over the past two weeks and they are all looking to PMA as one of the ways that they can support robust maintenance programs while using the competitive marketplace to save on maintenance costs. With the industry trend of developing PMAs that also improve reliability, this could be a “double” benefit for the air carrier community.
Keeping the air carriers safe and flying is important to the PMA industry. Keeping them flying economically is an additional benefit that PMA companies are proud to offer.
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