What Are The Known Risks For The Aviation Sector?

The darkest time in the aviation industry is now over, and the sector fared better than anticipated during the worldwide COVID-19 outbreak.

Total revenue per person kilometer (RPK) fell by 66 and 58 percent in 2020 and 2021 compared to 2019. At the height of the epidemic, a significant percentage of the world’s aircraft were parked, and thousands upon thousands of air transport were delayed or canceled.

However, with the introduction of vaccines, travel demand surged again, and the chances of a complete industry revival have improved considerably more than during the worst of the crisis, say experts working from civitavecchia to fco.

• A Congested Supply Chain Halts The Industry’s Resurgence.

Over the past two years, shutdowns, border controls, and changes in customer behavior have clogged supply chains and prolonged delivery delays. The ensuing supply chain issues have had a significant impact on aviation.

Airlines, vendors, and Manufacturers were compelled to reconsider their supply chain strategy due to the shortage of essential aviation parts and worldwide logistical issues that have caused production time for some parts to expand; in some cases, the timeframe was extended to more than a year.

Because numerous smaller manufacturers of mechanical parts went out of business during the recession and others switched to making components for other industries, engine makers are especially being hit. In addition, components for cable, electronics, and raw materials like titanium and aluminum are also in short supply.

• The Cost Of Jet Fuel Puts Pressure On Companies’ And Travelers’ Budgets.

A massive increase was observed in jet fuel prices in March 2022, compared to the stagnant prices followed since September 2008. After that, it began to worsen, and the prices kept increasing per gallon in 2022, even during the pandemic. Although there were some fluctuations, an increase was continuously observed.

The market price of jet fuel was 123 percent higher in mid-June than in June 2021, as per IATA’s jet fuel price monitor.

Fuel costs can make up as much as 40% of annual expenses, so this is undoubtedly a worrying development for airlines. The fact that ticket prices would increase to help cover the expense of jet fuel is also terrible news for travelers. As airline tickets frequently take several months to keep up with rises in fuel prices, the worst could yet be ahead for consumers.

Since many choose to buffer the price of jet fuel by buying a predetermined amount ahead at a set price, certain companies are less impacted by the price rises than others.

• Business Travel Has Altered Significantly.

Many people, including us, were quite worried about the prospects of business trips during the height of the coronavirus outbreak. It was commonly believed that the introduction of online conferences would discourage many businesses from paying for expensive plane tickets for staff members since they could simply tap on a Webinar link. Business travel seemed dead in the face of border controls that rendered it challenging, if not hard, to work abroad and an economic slump that forced many businesses to find cost-cutting measures.

Nevertheless, a few indications that the reports about the death of the business trip could have been substantially overblown.

But those standards might never reach the height of corporate travel. Even the most optimistic projections predict that up to 25% of business travel will be one-way only. Moreover, there are increased chances that the airlines relying on selling business-class tickets can increase the price up to 10 times as much as standard economy seats to sustain the falling percentage in corporate travel since business travelers can make up to three-fourths of an airline’s revenues even though they make up only about 12% of all passengers.

• The Point At Which Public Perception Starts To Shift

Within only a few years, attitudes around air travel have substantially shifted. So by health problems, we don’t only mean those caused by the epidemic. For example, a minor but vocal minority protested about traveling for environmental grounds even before it was believed that fellow travelers were potential carriers of a terrible virus known as COVID-19.

Although many in our sector would contend that efforts to reduce pollution haven’t been adequately recognized and those flight pollutants are grossly mistreated, the general opinion is a potent force. Whether it is appropriate or not, the increased focus on aviation’s carbon emissions would almost probably return together with the need for travel.

There may be other factors as well that cause an individual to think twice before purchasing airplane tickets. For example, individuals may hesitate to schedule a ticket if they read about different unfortunate occurrences.

• Governments Might Not Support Airlines

There is a chance that there will not be a state lifeline to save the aviation industry this time if one or a mixture of the aforementioned possible hazards pushes it back into full-blown crisis mode.

Governments from all around the world provided substantial amounts, preventing bankruptcies and preserving thousands of employment opportunities.

Conclusion:

The aviation sector is expected to encounter these main dangers and difficulties as the travel season approaches again. However, there are two sides to everything, which means that with problems, there will also be opportunities.