By 2031, the global aviation fleet will be smaller than once projected because of the impact of COVID-19, and a decade of smaller fleets will mean constrained growth and consolidation, according to Oliver Wyman’s Global Fleet & Maintenance, Repair, and Overhaul (MRO) Forecast 2021-2031.
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Airlines will not return to 2019 levels of operations until at least 2022, with recovery in parts of the aerospace market lagging by a year or two.
For consumers, the slow recovery may mean fewer direct and less frequent routes — at least until the pandemic is under control and normal economic activity returns.
“COVID has created a long list of challenges never seen before in modern commercial aviation,†said Tom Cooper, an Oliver Wyman vice president and one of the authors of the report.
“It will take the next few years for the fleet to adjust and return to stable growth, but even after 10 years, the industry will never fully regain all that it has lost from the pandemic. Right now, with many airlines still burning through millions of dollars each day, the focus must be cash flow management.â€
Fewer aircraft flying means fewer planes need to be produced or repaired. Given the inventory backlog of new planes that are built but undelivered or unsold, more aircraft will be delivered to airlines over the next several years than will be produced by aerospace manufacturers.
While production and deliveries are closely aligned in normal years, this imbalance reflects conflicting pressures on airframe manufacturers to balance the realities of lower market demand with needs of key suppliers to maintain enough production.
The impact of COVID on the MRO market will also be significant -- both in the short and long terms. Short term, demand in 2020 and 2021 is expected to be 33 percent, or $60 billion, below pre-COVID projections for the combined two years. Over the next 10 years, the industry will lose more than $95 billion in revenue compared with pre-COVID expectations.
Despite the challenges, there are some hopeful signs. Deliveries of narrowbody aircraft are expected to hold up reasonably well, with cumulative deliveries approximately 90 percent of pre-COVID expectations over the 10 years. This class of aircraft that tend to carry under 200 passengers is benefiting from their smaller size, which makes them easier to fill during periods of lower travel demand.
In contrast, widebody aircraft deliveries and production could be as much as 40 percent below what had been predicted. This is due to falloff in international and business travel driven by changing corporate travel policies and government restrictions.
Despite significant short-term losses, the long-term outlook for MRO is a bright spot. Aftermarket providers will begin to see consistent growth over the mid and long terms, as the size of the fleet expands and the overall age increases. This will drive interest from private equity and other investors. ■