Rough Times for Airlines
Over the past year and a half, the Covid-19 pandemic has made things very rough for many people and businesses alike, similar to the rough times that the airline industry has seen. As we discussed in our earlier blog, “Hazardous Covid-19 Variant Omicron Puts Travel in a Bind“, the many variants that have mutated to become more easily contracted by the host put a hard stop to the comeback of commercial flights. Demand had not reached pre-pandemic levels just yet, but things were surely picking up after public fear began diminishing with vaccinations being more available.
It was a huge upset to hear about the outbreak of a variant putting people back in the house, many believed the storm was passing but it seems we were only in the eye of it. In recent months, the increase of cases has affected the labor force in many industries. A good portion of businesses have been able to make the transition to remote work, but this model does not function for every business.
Examples of businesses highly affected by a virus that causes regulations to limit social interaction and are unable to transition to remote work are restaurants, nightclubs, gyms, airlines, etc. The need to be physically present in these highly regulated businesses can become very difficult. In past times feeling a few symptoms of the cold or simply being around someone who was sick, would not warrant a day off. Present times have changed drastically.
If you come in contact with anyone that tested positive for the virus, you will most likely be told by your job that you need to stay home a few days and then get tested before returning. Even feeling some symptoms after being anywhere public, could become a reason that you should take the day to get tested. This can lead to a very sporadic labor force, putting many businesses in danger. Especially time-sensitive industries like airliners.
Just recently over the holiday weekend, a labor shortage that stemmed from sick employees led to canceled flights and delays across the globe. This left many passengers to miss holiday festivities and even be stranded trying to get back home. Reminiscent of the supply chain complications that took place earlier this year, when labor shortage left thousands of deliveries on hold. Which was covered on the blog, “Alarming Global Supply Chain Challenges Leave Aerospace Industry Frantic“.
Though the aerospace industry, the airline sector in specific, would suffer from these many factors bearing down on demand and capabilities, a few achievements give hope that those in the industry can emerge triumphantly.
Aerospace Industry Trying to Still Soar High
When the labor shortage left deliveries on hold, many companies would seek different options to be able to ship their supplies or products out. Even the airline industry had to seek alternatives because they experienced a parts shortage. Parts that were essential to help in the shipping dilemma. Driving big companies to make some power moves in order to gain some control over their ability to ship and receive.
A few things that were done by known shipping company Amazon, according to the article “Amazon is making its own containers and bypassing supply chain chaos with chartered ships and long-haul planes” posted by CNBC, to gain some control were:
- Chartering private cargo ships
- Making their own containers
- Leasing planes
Experts cited in the article explained that by chartering private cargo ships, Amazon was able to effectively control how their shipments were brought in. Allowing them to avoid the busy ports that can cause delays up to 3 weeks long, or longer as Los Angeles already experienced this year. An ocean freight analyst reported to CNBC in November that there were 79 vessels waiting to get into the harbor, just sitting, for upwards of 45 days, and even emphasized that a shipment brought in by Amazon was able to wait only two days in the harbor.
Also, by producing their own containers Amazon will be less likely to experience shortages in containers or pay for the new inflated costs. The article depicts containers as being less than $2,000 pre-pandemic, but today these costs have risen to $20,000. This will save Amazon a great amount of capital and will save them in times of shortages of containers.
Lastly, by dedicating planes to their shipments only, Amazon can control shipments much more effectively. Especially in a time when many airplanes are grounded and unable to assist due to parts shortages. Though, airliners have recent good news in terms of airplane availability and shipments.
With some minor setbacks, large aircraft manufacturers like Boeing and Airbus have been making strides to deliver the planes they said would make it out in 2021. An article posted by CNBC, “Boeing’s 2021 deliveries are on track to more than double from last year, Dreamliners still on hold“, has highlighted Boeings’ ability to deliver over 302 planes this year. This count was double what shipped out in all of 2020, a year where the pandemic held back demand. Along with the two fatal crashes that would ground their 737 Max worldwide.
Understandably, it would take a long time for countries to allow the plane back active after such tragedies took place. According to “China clears Boeing 737 Max to fly again“, investigators of the fatal crashes blamed a faulty computer system that pushed the nose of the plane down, and would not allow pilots to override it manually. Though time allowed for the 737 Max to be allowed back in the air, with China being one of the last to hold on to the grounding. Good news for Boeing, as in late October they said Chinese airlines accounted for a third of their Max planes in inventory, roughly 120.
Business Keeping Airliners on the Runway
A quality shared across cultures is the modern business person, someone chasing goals and traveling across the world to do so. Regardless of the pandemic that has taught people a certain need for social distance and remote communication, the fact remains that good business still requires that human touch. The relationships nurtured between entities are hard-kept remotely through video calls and online chatting.
These difficult times were able to highlight this fact, with business traveling on the rise and even surpassing pre-pandemic numbers of 2019. With a slow down as the Omicron variant takes the country by storm, but still comparably performing well. According to the article “Bizav Traffic Remains Up over 2019 Despite Omicron”, business aviation has grown since 2019 at these percentages:
- United States – 5%
- European – 8%
- Germany – Level with 2019 levels
- Spain – 42%
A few outliers in the rest of the world include the worst and best-performing markets for business aviation. The countries falling in to the category of worst are Canada, Mexico, Saudi Arabia, and Morocco. While the strongest markets are Brazil, United Arab Emirates, and Turkey.
This research shows that the need to maintain relationships and take care of things in person is still evidently a part of most cultures around the world. Good news for the airline industry, if they can avoid more shortages of labor from this pandemic.