During this difficult period of Covid-19, the aviation market is trying to find the best way to work around the situation to avoid a further chaos.
“Thousands of health professionals are heroically battling the virus, putting their own lives at risk. Governments and industry are working together to understand and address the challenge, support victims and their families and communities, search for treatments and a vaccine.” (Michael Walsh CEO of Aer Mobi & PBEC Pacific Basin Economic Council, Hong Kong).
A lot of aviation companies all around the world reduced their schedule for many reasons, one of them is the lockdown and another due to the government traffic limitations. Some places such as Hong Kong, the Government authorities allow only their own citizens to enter in HKSAR or people who has the resident permit.
The governments of all countries are the main support to give assistance and stimulus for the companies avoiding their collapse. The sectors which are more affected are airliners, their suppliers and airports. For instance, the US has provided the largest amount of aid, offering $58B to airlines and cargo carriers while the Hong Kong Government has pledged to acquire 500,000 airline tickets from local carriers to help with liquidity efforts on top of airport subsidies.
China green shoots – Recovering from Covid-19
There are promising signs of a recovery in China, as the government has opened up a majority of major tourist attractions and there has been increased hotel occupancy and city transport use. Although air ticket sales have rebounded slightly as essential travel has returned, sales since then have plateaued, suggesting lasting caution from consumers and preference for local travel.
On 8 April, the Wuhan Tianhe International Airport reopened to a reduced schedule of domestic flights, as Chinese carriers gradually resumed flying to the then-epicenter of the outbreak. In total, it mounted more than 30 flights on the first day of operations. The airline company China Eastern Airlines reported that the first flight operated was a domestic flight to Sanya in Hainan province carrying a total of 46 passengers, the compatriot China Southern saw its first flight take off bound for Chengdu carrying 81 passengers. Air China’s first flight of the city was also bound for Chengdu.
The majority of the countries needs medical supplies to support the health professionals, patients and the population. And now with the resumption of the flights, China can resume the exportation of these supplies. Wuhan is one of the cities which has a large manufacture of medical supplies.
How will Sustainability efforts for a low carbon aviation industry by 2050 be adversely affected by Covid-19?
- Economic stimulus, there is an argument to be made that it should focus on advancing the energy transition—but there is no reason it must. Jobs will be a far more important driver than emissions, and it is easy to see investments to create jobs being sharply at odds with a low-carbon transition.
- Government intervention, it may offer a lifeline to industry without strings, or they might steer industry in a specific direction, or they might step back and let the market sort out who should survive and who doesn’t.
- Money talks, oil and gas companies are often profitable, and those profits can fund the energy transition—either directly, as in the case where they make investments in technologies that are essential (like carbon capture and storage) or when they invest in adjacent energy sectors like solar, wind, or battery charging; or indirectly, when they pay dividends to shareholders who can then pump that money into low-carbon energy sources.
- Sustainable Aviation Fuels transition, Covid-19 a definite body blow for SAF – Sustainable Aviation Fuels transition efforts. Airlines are already deferring committed batch orders in 2020 and the price gap between SAF v Jet A1 fuel cost per USG is going to be a lot harder to justify to stakeholders in the short term when saving jobs and the survival of the airline is at stake. However, in talking to Neste it is clear that they feel large airline groups and certain governments will and must play a major role. Mandating the transition and offering stimulus to those who commit can mean the SAF market set-back is only temporary. In fact, it allows for the industry in the meantime to ramp up infrastructure to accommodate the transition faster and further reduce the gap in cost.
- Business Aviation can play a role, it can actually be a catalyst for further uptake and adoption of SAF and used as part of the experiment to further its cause as a sustainably aware sector – whilst in parallel continuing its advocacy and lobbying efforts to remain an essential economic driver especially in the recovery phrase of a post Covid-19 world where safety, security and health will be priorities for returning senior executives requiring to fly again globally.
Finally coming to the ongoing sustainability efforts in aviation. Cost control has always been a driving factor sometimes over quality in the business aviation sector as margins are always thin and competition fierce. So it begs the question of whether Covid-19 has adversely affected the low carbon industry target of 2050, especially when being the main polluters alongside airliners, the sector has little or no cash to spare on more expensive alternative aviation fuels touted by the fuel giants without owners and users buying in.
*This article was based on a research by Michael Walsh CEO of Aer Mobi & PBEC Pacific Basin Economic Council, Hong Kong.