How Is COVID-19 Impacting The Aircraft MRO Industry In SEA?
Global air traffic has practically been brought to a standstill and the global airline industry has plummeted as countries worldwide implement travel restrictions and fleet groundings to curb the spread of the coronavirus.
Airlines in Asia Pacific will suffer a large revenue drop of US$113 billion in 2020 compared to 2019, and a 50 percent fall in passenger demand in 2020 compared to 2019 with the worsening COVID-19 crisis, according to the International Air Transport Association (IATA). Furthermore, IATA expects a $314 billion drop in total world carrier earnings this year. Here are some of the measures in the region:
- Singapore Airlines has grounded 96 percent of its approximately 200-plane fleet on March 23 and resuming of operations is unclear.
- Thai Airways has cancelled all international flights and transferred flights from Bangkok to Phuket, Krabi and Chiang Mai to its sister company Thai Smile Airways. The cancellations will last until May 30.
- Philippine Airlines and Cebu Pacific flights have been suspended until May 15. The airlines are committed to resume operations starting May 16, 2020, depending on government mandates and regulations.
- Malaysia Airlines suspended flight operations across its network until May 2020 for domestic and June 2020 for international services.
- Indonesia commercial flights—domestic and international—are banned until June 1
- Vietnam’s Jetstar Pacific has suspended international flight and cut back domestic flying
The demand for Maintenance, Repair and Overhaul (MRO) services are high dependant on the size and flight activity of global fleets. With grounded aircrafts, demand for these services diminishes and MRO providers and spare parts suppliers will suffer, according to a report by Roland Berger.
The original forecast for MRO spending in 2020 has been adjusted with a 59 percent drop for the region—from US$91.2 billion to US$42.7 billion (Oliver Wyman). Major players such as Boeing are switching its focus to defence from commercial flights to weather the crisis while Airbus has postponed ramp up of commercial aircrafts (Globaldata). Furthermore, Airbus has recently dropped out of a joint venture with Thai Airways International for the development of a 11-billion-baht MRO facility at Thailand’s U-Tapao Airport due to the impact of COVID-19.
Despite the bleak outlook, there is hope for the industry with global efforts. Companies like Rolls-Royce has established a COVID-19 data alliance to kickstart economy into recovery. Moreover, general aviation is playing an active role in the fight against the pandemic by providing transport of medical supplies and key personnel.
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As the pandemic is still evolving, what is the future of the aviation and MRO industry? How is the situation in your region? How have you been impacted? What do you think are some strategies which could help this sector recover from the impact?
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