Covid-19 groundings encourage fleet changes

Credit: diy13 / Shutterstock.

The unexpected issue of where to park grounded aircraft may shape the post-Covid-19 commercial aerospace market. The Covid-19 pandemic has accelerated a collapse in demand for commercial aerospace and airlines are experiencing huge financial losses.

Travel restrictions and border closures due to Covid-19 have affected 98% of global revenue-earning routes, according to the International Air Transport Association (IATA), and airlines have reacted by reducing seat capacity. With an estimated 40% of the global airline fleet grounded, struggling airlines are faced with mounting parking and maintenance fees and financial woes due to lost passenger revenues.

This issue is arguably forcing airlines’ hands as they are compelled to estimate future demand now and match their fleet accordingly or incur costs during a period when many are financially vulnerable. For example, on 12 May, Brussels Airlines announced that since operations were suspended on 21 March, the airline had been losing €1m (£891,715) a day.

These losses were due to the absence of passenger revenue, and the costs of parking and maintaining its fleet of 54 aircraft and worker wages. This unsustainable position compelled the airline to announce the reduction of its fleet by 30% and of its workforce by 25%.

A survey conducted by IATA of recent travellers found that 40% would wait six months or more after the pandemic had been contained before travelling again. Additionally, in China, which is ahead of the rest of the world with regards to managing Covid-19, domestic flights are steady at 40% of pre-Covid-19 levels.

These factors indicate a post-Covid-19 environment, in which passenger demand will not recover quickly. Norwegian Airways has recognised it, anticipating that the disruption will persist until 2022. To survive until then, the airline said that ‘a significant change to fleet size’ is necessary to ‘reduce costs’ and allow for the financing of a ‘hibernation phase’. This demonstrates the unique challenges presented by the Covid-19 pandemic. Airlines must make decisions now, which will allow them to overcome the length of the crisis.

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