CAPA’s World Aviation Summit – where did all the planes go? Aerospace and MRO in focus

Air travel sector grapples with gaps in labour market

When faced with the unprecedented drop in air travel in 2020, the air travel sector was forced into survival mode.

In the early stages of the COVID-19 crisis the industry shed significant numbers of staff. This was augmented with a wave of retirements, including the departure of some of the industry's most experienced and highly trained and skilled workers. According to Deloitte, voluntary turnover rates at airlines during the early pandemic period peaked at nearly double the rate of the average across the private-sector workforce.

As the pandemic and travel restrictions eased and global air travel recovered through 2021 and 2022, an acute shortage of labour became one of the industry's most pressing concerns. Without sufficient workers (particularly trained and experienced staff), delays and cancellations spiked above pre-COVID-19 levels. Not only did this prove to be a highprofile embarrassment to the industry, it also put a drag on the wider recovery.

The industry has largely managed to restore employment to pre-pandemic levels - although this has not been an easy task.

Bottlenecks in hiring, training and regulatory approvals have slowed the process. In addition, employment markets are at historically tight levels, and there are signs of a steady deterioration of the industrial relations situation between workers and aviation businesses.

Aerospace sector in transformation as OEMs rebuild output

Like most sectors of the travel chain, the aerospace sector has not escaped the disruption of recent years. However, with the rapid recovery of travel, easing supply chains and pressure on airlines to improve their sustainability, the outlook for the sector is increasingly positive.

Between the delivery halts of the 737 MAX and 787 and the COVID-19 crisis slowing production rates, aircraft deliveries from the commercial aerospace sector have slumped since 2018. While production rates are steadily being rebuilt, airlines and lessors are fuming at delays.

Due to the recent crises, major Western original equipment manufacturers such as Airbus, ATR, Boeing and Embraer have forgone, or delayed, the delivery of more than 3000 new aircraft that otherwise would have entered service by now.

Through the pandemic, aerospace supply chains were upset by border closures, local/ regional lockdowns, transportation disruptions workforce shortages and ongoing issues around the financial viability of some firms, particularly for small and medium enterprises.

This created major headwinds for OEMs, which were only worsened by the Russia-Ukraine crisis and global geopolitical tensions, which in turn lead to a spike in energy prices, material shortages and further disruption to global trade.

In response, OEMs have insourced some production and are moving elements of their supply chains away from global sourcing and back into domestic markets or regions that have better geopolitical alignment. Supplier bases are being widened via dual or multi-sourcing and expanded partnerships, eliminating single source dependencies.

OEMs are increasingly devoting engineering and management resources to improve control

and coordination across the supply chain, particularly at lower tiers.

A major element of this is the digitalisation of the sector.

For OEMs, the adoption of digital technologies and integrated platforms offers better visibility, compliance, predictability, and accountability in the supply chain. For their suppliers, there are benefits in cost optimisation, greater flexibility, and improved on-time performance.

The industry remains challenged by its workforce and skills shortages.

The adoption of digital technologies, automation and other capabilities will not be effective unless the sector has a workforce that has the knowledge and skills to use them.

The sector is also facing higher costs as industry transformation, supply chain realignment, and shortages in materials and skills send prices up for the entire sector.

Behind all of this, the sustainability agenda continues to build as the air travel industry attempts to move towards a net-zero future. Airlines are looking to OEMs to innovate in areas such as sustainable aviation fuels, hybridelectric systems and hydrogen, in order to advance decarbonisation and help the sector meet its sustainability targets.

Insights from CAPA's World Aviation Summit

This was the topic of a panel discussion at the CAPA World Aviation Summit in Abu Dhabi at the end of Nov-2023.

The session was moderated by CAPA - Centre for Aviation, Senior Analyst Americas, Lori Ranson and included insightful observations from Air Serbia, CEO, Jiri Marek; Discover Airlines, COO, Wolfgang Raebiger; TUI Group, Chief Airline Officer, Marco Ciomperlik; Air France-KLM, EVP & CCO, Angus Clarke; and Finnair, SVP Strategy & Fleet, Christine Rovelli.

Some of the topic areas covered included:

• With delivery delays expected to continue for the next few years, what strategies are airlines using to meet their capacity needs and keep their fleets operating?
• How are MRO operators looking to benefit from airlines delaying fleet retirements and keeping older/more maintenance intensive aircraft in service for longer?
• What are the implications of the expansion of eCommerce demand for the aircraft conversion sector?

You can view the full session via the following CAPA TV recording.

About the CAPA World Aviation Summit

The 2023 edition of the CAPA World Aviation Summit & Awards for Excellence took place in Abu Dhabi, in the United Arab Emirates. The event, held on 28-29 November, and hosted by the Etihad Aviation Group, brought together thought leaders from aviation and the wider travel industry, including airline and airport executives, key suppliers, technology partners and regulators.

The focus for the summit was the biggest trends which aviation faced in 2023, with global airline leaders sharing their insights and perspectives on the changes brought about in the aviation sector over the past year.

The topics ranged from rising costs, environmental sustainability, operational issues, international recovery, digital transformation, supply chains and more, and also provided some guidance on the future trajectory of air travel in 2024.

This year's event to be hosted in Belgrade, Serbia

With the air travel industry having undergone an immense shift over the past few years, it is more important than ever to understand the strategic and competitive landscape across the industry.

The 2024 edition, under a new name, CAPA Airline Leader Summit World & Awards for Excellence, is to be held on 21-22 November 2024 in Belgrade, Serbia. Hosted by the City of Belgrade and Air Serbia, the event will tap global aviation leaders for an exciting examination of the direction the aviation industry is taking.

It will provide unique global perspective, unpacking the changes that are shaping the way airlines, airports and sector suppliers are doing business.