The Hindu BusinessLine, March 20, 2022
As airlines struggle to revive themselves following the pandemic induced two-year hiatus, short-haul flights are coming off the ground faster than long-haul ones.
Short-haul flights or shorter flights are giving the single-aisle narrow-bodied aircraft a leg up with their deliveries expected to hold up reasonably well.
“After almost two years of lost growth due to Covid-19, single-aisle traffic is on a rebound, and airlines and customers are investing in these aircraft, as demonstrated by the orders at the Dubai airshow. The long-haul market is still expected to follow between 2023 and 2025,” an Airbus spokesperson told BusinessLine.
The crisis arising out of the pandemic was soon followed by the war in Ukraine, which has nearly crippled the airline industry to an extent that international travel remains subdued. “The pandemic wiped out 15 years of passenger capacity growth. Traffic was hit even harder and fell back to 1999 levels. International travel probably won’t return to 2019 levels until sometime in 2023,” the aviation consultancy firm, Cirium, said. According to the global travel industry body IATA, total revenue passenger kilometres in January 2022 decreased nearly 50 per cent compared to January 2019. International traffic was down nearly 63 per cent.
“The short and medium-haul routes are considered more attractive for carriers, as it allows them to target large volumes of leisure passenger segments. This segment drives the single-aisle aircraft, upon which the industry will depend as it recovers from the pandemic,” said Abhilash Abraham, Senior Research Analyst, Aerospace & Defense Practice, for research and consulting firm Frost & Sullivan. The return of the 737 MAX platform and the potential introduction of A321XLR in the next few years are critical factors that can contribute to this growth, he pointed out.
A domino effect
The volume of passenger traffic has a direct impact on demand for new aircraft and on the fortunes of airframe manufacturers like Boeing and Airbus. Their performance, in turn, determines the prospects of thousands of component makers., including many in India, who are meshed closely into the complex global aerospace industry supply chain.
According to Aravind Melligeri, Chairman & CEO, of India-based aircraft component maker, Aequs, which operates the country’s first Aerospace Export Zone in the hinterland of Karnataka at Belagavi, the pent up demand for travel in countries like India and others in the Asia Pacific is driving the growth of the narrow-bodied aircraft.
For instance, large original equipment manufacturers reportedly need to produce upwards of 135 single-aisle aircraft every month currently compared to just 100 pre-Covid. That is an increase of 30-35 per cent. Clearly, companies that are able to meet this pent-up demand are in a good situation. However, Melligeri felt it is a Catch-22 situation for the industry. The biggest challenge is the lack of capacity to meet this demand for smaller aircraft.
At the same time, if companies invest to create that additional capacity to meet the current demand for single-aisle, narrow-body aircraft, there is no guarantee it will continue at the same level when the world returns to normal. Abraham of Frost & Sullivan said, in the long term, a vast majority (more than 70 per cent) of Boeing and Airbus’ sales will be in the single-aisle aircraft segment. Introduction of more low-cost carriers (LCC) across regions such as Akasa Air (India), Bonza (Australia), Breeze Airways (USA) that leverage shorter routes will be a crucial driver for the sales of single-aisle aircraft. The introduction of longer-range variants of single-aisle aircraft such as A321XLR, which has more than 400 orders at the end of 2021, will be critical for further interest in this aircraft segment from operators.
Airbus, according to its spokesperson, delivered 611 aircraft to 88 customers. Of these, 483 were A320 family and 221 were A321neo. In 2021, we won orders for 771 aircraft from 29 customers. Of these, 661 were A320neo family. It is quite obvious that those who can travel are doing so with a vengeance, even if it means flying to destinations that are merely three hours away.
This article first appeared in The Hindu BusinessLine