Aircraft and transport: the future of aviation? How will we fly again?
The epidemic paves the way for a sector revolution: fewer actors
Greg Foran, CEO of Air New Zealand, may be the last, in chronological order, of the leaders of the air transport sector to say that his airline will emerge from the crisis of the epidemic, smaller and with a reduced number of activities. The statement echoes what was expressed by the president of Lufthansa, who believes that the public most wary of the risks to their health, will take a long time to regain confidence in air travel and tourism.
Today -AVIONEWS reports- it is difficult to predict whether the large air transport companies will decide to put part of their aircraft fleet on sale, or to keep it in storage waiting for demand to return to pre-epidemic levels. Provided that the demand levels of 2019 will never be equaled. But one factor is almost certain: there will be considerable inertia in the system, even when travel restrictions are relaxed. This will likely imply a collapse in the value of the leasing installments of middle-aged planes, especially in wide-body ones, due to an oversupply. This excess, in turn, will be generated by the numerous airlines that will fail during the crisis and by the intent of those who survive to change their old systems in exchange for new ones in the face of lower demand.
The result -AVIONEWS reports- will be further bad news for the repair-maintenance sector which had enjoyed huge profits thanks to the expanding demand linked to extraordinary passenger growth and, in recent years, to the sudden crisis of the 737 MAX aircraft due to delays of the A-321 NEO and those of the 787. This upheaval will be exacerbated because the new systems will have less need for assistance for several years, and this will further decrease the market.
If the scenario was not worrying enough, it should be added that once the crisis has passed, the carriers with middle-aged airplanes will want to change new for old instead of paying large amounts for heavy maintenance operations, and will be attracted to this solution by an excess of availability (lower prices and better payment conditions), and short delivery times of Airbus and Boeing. In fact, the second already has dozens of 737 MAX aircraft ready for delivery and will have an extra time to solve the recertification problem.
In the financial field, investment funds and other large investors who have so far focused on middle-aged planes, will be rather skeptical and will feel puzzled by all these events to return to investing immediately in air transport. Who will benefit from this situation? Easy to say: airlines and companies that will have huge liquid capital resources with which to start investing, with appropriate strategies, to benefit from the weaknesses of other competitors in the sector. For this reason Lufthansa, Airbus, and Boeing, on the other side of the Ocean, begin to ask for financial resources, and to increase their liquid capital in order to take advantage of the situation.
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