LIMASSOL, Cyprus, Jan. 26, 2021 /PRNewswire/ -- 2020 will go
down in history as one of the worst years for aviation industry
ever. The year ended with an estimated $118.5 billion in losses for the industry and
countless bankruptcies of companies that were not ready for a
disaster of this magnitude. And while we all look at 2021 with
hope, the consequences of 2020 will be felt for years to come. So
what can we expect from the aviation industry in 2021?
COVID-19 crisis was not the first one the aviation industry had
to face over the years. From the oil crisis in the 1970s, to 9/11
terror attack, to world recession. And after each of these global
crises, the aviation industry recovered successfully, proving its
strength and ability to innovate in the face of adversity. These
major crises in aviation had a number of common outcomes that allow
us to predict what will happen next in aviation industry after we
manage the pandemic.
When COVID-19 hit, the number of passengers' flights plummeted –
people were unable or unwilling to fligh, even though it is proven
that there is less of a change to catch a virus while travelling by
air than while visiting a mall. Regardless, the decrease was
staggering. On the other hand, the demand for cargo flights saw a
rapid growth and cargo airlines were able to earn additional
profits. Cargo aviation will continue to thrive in 2021 and
beyond.
Now, every day, thousands of people are vaccinated from COVID-19
virus. Quick vaccine development and smooth supply will slowly open
countries' walls and allow the aviation industry to get back to
business. It is expected that the industry will begin its revival
in Q2 and the numbers of passengers will steadily grow during the
second half of the year. Unfortunately, according to IATA (the
International Air Transport Association), 2021 will still be
difficult for airlines, as the expected average load factor for
European airlines will be about 65%, meaning that airlines won't
even break even as to do so they have to run on average at 70%.
IATA also predicts that the industry losses will reach $38.7 billion in 2021 and that the global
passenger traffic will not return to pre-COVID-19 levels until
2022.
In 2020, many aviation companies ran into financial difficulties
- some found themselves on the verge of bankruptcy, others have
massively cut costs, and some have turned to investors to survive.
As a result, there might be an increase in mergers and acquisitions
and of small businesses will be joining large corporations in 2021.
This year opens great prospects for business development through
acquisitions and mergers. Additionally, due to the losses of the
global airline industry, access to public financial market becomes
difficult and much more expensive.
Issues with finances and reduced options in aircraft financing
force airlines to reconsider their strategies. In 2016-2019 many
growing airlines were able to profit by selling lease back new
aircraft thanks to high capital in the market and favourable
conditions by manufacturers. But now it becomes very difficult to
sale lease back new aircraft. So it's no wonder that many airlines
choose to postpone the deliveries of new aircraft orders. Following
that, aircraft production companies, Boeing and Airbus, are forced
to decrease their production volumes. In the short-term this change
might have an impact in lost jobs and revenue, but when the market
recovers, the impact to the industry will be huge. Due to the
reduction of the production of new aircraft, the industry will face
a lack of aircraft capacity to serve the demand. As it takes around
two years to rebuild the supply and production chain, ACMI market
will have an opportunity to fill the demand.
Another consequence of the financial difficulties of companies
is the increased supply of labour. Following many bankruptcies and
cuts, a large number of different aviation professionals will enter
the job market in 2021. Many of them will turn to specialised
aviation job portals, so strong, stable and reliable companies will
have the opportunity to hire high-quality specialists at attractive
prices.
Probably the most positive outcome of the year will be massive
advances in technology. 2021 will be a year of modern solutions for
the aviation industry. In order to optimise processes, better
manage costs, companies will invest in modern technologies, IT
solutions that will save time, manpower and money in the long run.
From smart solutions aiding day-to-day operations, to advanced
self-service and biometrics in airports, to artificial intelligence
and machine learning.
It seems that a couple of upcoming years will not yet be easy
for aviation, but they're winding up to be interesting and
exciting.
For media inquiries:
Vilma
Vaitiekunaite
+370 686-163-36
vilma.vaitiekunaite@aviasg.com
About Gediminas
Ziemelis:
Gediminas Ziemelis is a founder
and chairman of "Avia Solutions Group" - one of the largest
aerospace servicing companies presented in more than 67 countries.
In 2016, G. Ziemelis received a prestigious European Business Award
in recognition for his visionary business management and
development skills. The same year, under his leadership, Avia
Solutions Group was named a national public champion in the
category of Entrepreneurship, earning a spot in the top 110 of
European businesses. Twice, in 2012 and in 2014, Ziemelis was
acknowledged as one of the top 40 most talented young leaders in
the global aerospace industry by the leading USA aerospace magazine "Aviation Week". 2014 –
2017 Gediminas Ziemelis personally supported and consulted Chinese
Banks (including ICBCL, CMBL, and Skycop) with regard to financing
aircraft sale-leaseback transactions in the CIS region. His total
value of transactions – more than $ 2
B. 2006 – 2013 Gediminas executed successful IPOs of 4
companies at OMX and WSE and raised public capital worth more than
$ 100 M.
More info: www.gediminasziemelis.com
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SOURCE Avia Solutions Group