A report from the International Air Transport Association published on 1 July found that domestic Revenue Passenger Kilometres (RPKs), a measure of customer demand, showed signs of initial recovery in May. Domestic RPKs rose from -86.2% in April year-on-year to -79.2% in May year-on-year.

Associate Analyst at GlobalData Harry Boneham comments: “This initial recovery of domestic RPKs, whilst international RPKs remain severely depressed and stagnant, indicates that the recovery of the overall commercial aviation industry is following the trend observed following previous crises. This renders the recertification of the 737 MAX essential for Boeing in order to meet the demands of the post-Covid-19 market.”

Trends observed following previous crises such as the 2008 Great Recession and 9/11 indicate that shorter, smaller flights will recover quicker from the Covid-19 crisis. Demand for regional and narrow-body aircraft was impacted to a lesser extent by previous crises and recovered more quickly than wide-body aircraft. Regional and narrow-body aircraft more commonly operate on domestic routes, while wide-body aircraft tend to operate on long-haul international flights between travel hubs.

In the narrow-body sub-sector, Boeing is reliant upon sales of the 737 MAX. According to Boeing, in 2019 the 737 MAX accounted for 67.2% of the company’s narrow-body sales by units. Successfully attaining recertification, following the conclusion of FAA testing on 1 July, would allow Boeing to strengthen its offerings in the narrow-body sub-sector. However, failing to do so could render Boeing overly reliant on wide-body sales, a market, which appears unlikely to recover in the near term. This would allow competitors such as Airbus, which offers a number of narrow-body products such as A320, to gain market share.

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