Air travel’s sudden collapse will reshape a trillion-dollar industry

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Air travel’s sudden collapse will reshape a trillion-dollar industry
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Bold airlines with enough funds may use the coronavirus crisis to make their fleets greener

international jamborees these days the Farnborough air show wrapped up on July 24th as a virtual event. Webinars featuring grim-faced executives were not as entertaining as noisy acrobatic displays by fighter jets. But commercial aviation’s most important showcase at least marked a point when heads began to turn away from the devastation wrought by covid-19 and towards what comes next.

Despite signs of life, particularly on domestic routes in large markets like America, Europe and China, the outlook remains uncertain. The wide-body jets used for long-haul flights stand idle. Carriers that rely on business passengers and hub airports are struggling. Although some American airlines expect a return to near-full operation next year, a second wave of covid-19 could dash these hopes. A small outbreak in Beijing in June set back the recovery in Chinese domestic flights.

This will open a big gap between what the pair, along with Embraer and Bombardier, makers of smaller regional jets, hoped to sell and what they actually will . According to consultants at Oliver Wyman, by 2030 the global fleet will be 12% smaller than if growth had continued unabated.

The engine-makers provide a case in point. Besides lower demand for their kit—Rolls-Royce was gearing up to supply 500 units a year to Airbus but will now probably make 250—they face a collapsing aftermarket for spares and fewer overhauls, points out David Stewart of Oliver Wyman. Airlines with in-house maintenance divisions can scavenge parts or whole engines from grounded planes.

As dark as the skies have grown for the air-travel complex, there are some opportunities. Airlines are restructuring. Europe’s big legacy carriers, under pressure from low-cost rivals, are slashing costs.has suspended 30,000 workers and wants to rehire them on less generous terms. Bankruptcies and cutbacks will leave gaps in the market, aircraft are cheap, once-scarce pilots are plentiful, and airports will have spare slots, if they are allowed to redistribute them.

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