Aviation After a Year of Pandemic Economics, People, and Technology: Proceedings of a Workshop (2022) / Chapter Skim
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6 Aviation Economics
6 Aviation Economics
Pages 39-48
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From page 39... ...
. Pearce discussed how the COVID pandemic affected the aviation industry economically and what can be expected in the future.
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Not only are those direct connections important to users, Pearce commented, but also they bring wider economic benefits by lowering barriers to trade, supply chains, investment, and tourism. Unfortunately, he added, the number of city-pairs has dropped since the beginning of the COVID pandemic.
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A VIEW FROM WALL STREET In the next talk, Epstein offered a Wall Street analyst's take on the aviation industry -- how the COVID pandemic affected it, where it is now, and what is its likely future. He began by offering some context with Bank of America economic forecasts.
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The narrow-body market will recover much, much sooner. Switching gears, Epstein said that one factor that will shape the aviation industry, independent of the COVID pandemic, is innovation.
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"My hope is everything continues to go on the right direction," he concluded, "but I think it's important to bear in mind that there is an underlying fragility to this whole thing that is sadly out of our hands." ECONOMIC CONSIDERATIONS CONCERNING THE EFFECTS OF THE COVID PANDEMIC Following Epstein's exploration of the aviation industry from the perspective of a Wall Street analyst, Harback offered a somewhat broader view as an economist. Noting that she has a background both in aviation economics and in health economics, she said that gives her an interesting perspective on how the aviation industry has been affected by the COVID pandemic.
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Transitioning from the demand factor to the business model factor, Harback told a story that ties back into policy and what can be done to mitigate the effects of COVID in support of the air travel industry. The story related to the COVID-related experience of Nav Canada, which is a nonprofit organization providing air navigation services for travel over Canada.
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A PERSPECTIVE FROM THE AVIATION SUPPLY CHAIN Otto offered yet another perspective on the aviation industry and its pandemic response, speaking as an insider of the supply chain that supports the commercial aviation industry. In 2020, he began, the commercial aviation industry, the defense industry, and aerospace in general were anticipating a strong future.
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"We saw governments, airlines, airports, everybody in the commercial aviation industry adopt new technologies, procedures, and policies very quickly to get things back up and going, and that's what we need today. It's just a different threat that we're dealing with." Ultimately, he concluded, the major goal should be getting industry and government to work together to make the air travel system healthier, easier to use, and more resilient.
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Harback responded that collaborations aimed at developing rapid, efficient testing could help foster increased international travel. Otto addressed the third part of the question, saying that technology is going to play a major role in address ing COVID-related issues in air travel.
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From page 48... ...
Another example, Epstein added, is that business aviation has been less affected by the pandemic than commercial aviation, so the manufacturers of business jets will recover more quickly than those who make commercial jets, and the same thing is true for companies in the supply chains for the business jets versus the commercial aircraft. In response to a question about the just-in-time approach to manufacturing in the aerospace industry, Epstein predicted that "it will probably end up being a factor in a bumpy recovery in the supply chain, for better for worse." No one who was running analyses or simulations of the just-in-time supply chain ever dreamed that the end markets -- that is, the number of passengers flying on airlines -- would go down by 60, 70, 80 percent or more.
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