Covid-induced supply chain concerns to continue in aviation sector, industry experts say

Trade frictions have delayed plane manufacturer efforts to boost production and meet demand for new jets with better fuel efficiency

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The supply chain disruptions brought on by the Covid-19 crisis, from securing the essential components to labour shortages, will stay with the aviation industry for a “very long time”, senior aviation executives told the Qatar Economic Forum in Doha.

“We had our Covid moment when we wonder whether there would ever be a demand for aeroplanes,” said David Calhoun, president and chief executive of the US plane maker Boeing.

“Fortunately, healthcare professionals got us out of that situation faster than most of us [had] expected … [still] I can see supply constraints for a very long time … our job is to resolve them but today supply constraints sort of dictate.”

Globally, supply chain frictions have delayed plane manufacturer efforts to boost production to meet airlines' demand for new jets with better fuel efficiency.

In the post-Covid era, Boeing and Airbus, which mainly enjoy a duopoly supplying passenger jets, have received big orders from airlines such as United and Air India, as there has been a surge in air travel demand.

But supply chain issues mean those planes will probably not be delivered for years down the line. Investment banking group Jefferies estimates there is an order backlog of 12,720 aircraft as of December, according to a Bloomberg report.

“We have to solve supply chain issues and that is not a short-term job … we have to ramp up the number of aeroplanes we produce to meet the demand of customers,” Mr Calhoun said.

“We have to keep the medium and the long-term goals in mind.”

The airline industry suffered a staggering loss of about $187 billion during the pandemic from 2020 to 2022.

However, global airlines are expected to return to profit this year after narrowing losses last year, despite economic headwinds, the International Air Transport Association said in a report.

The industry is forecast to collectively earn a net income of $4.7 billion in 2023 — the first time it will return to the black since 2019, when it recorded a profit of $26.4 billion — as passenger demand continues to improve and Covid-19 restrictions ease, it said.

“Because of the supply chain constraints, we too are suffering as an airline,” said Akbar Al Baker, group chief executive of Qatar Airways.

“We have, at times, aeroplanes grounded because there is a lack of engine parts, and sometimes lack of avionics because our orders that were placed a year ago, have not been delivered yet.

“These are the consequences of pandemic that happened first time in a century, and we were very unprepared.”

In 2021, airlines pledged net-zero carbon emissions from their operations by 2050, bringing the air transport industry in line with the objectives of the Paris Agreement to limit global warming to 1.5°C above pre-industrial levels.

However, Mr Al-Baker said he was “sceptical” about this target.

“Let’s be realistic. There is not enough production of sustainable aviation fuel,” he said.

“The hydrogen project is in its infancy … they don’t know what hydrogen fuel will generate when it is flying at high altitudes. What the vapours coming out of engine will do at high altitudes when they freeze.

“Hydrogen technology will mature in second half of this century, after 2050.”

Mr Al Baker added that the public is making unnecessary noise about excessive emissions from planes.

Aviation is only responsible for 2.6 per cent of the global carbon dioxide emissions but the industry is at the top of criticism chain, he said.

Meanwhil, Mr Calhoun said sustainability has been a priority and it must remain a priority for the industry.

“Fleet renewal is main part of sustainability,” he said.

“Those who can maintain new fleets [with less emissions] and continue to update … they will stay ahead of everybody.

“Every new aeroplane family … the requirement to make the billions and billions of investment [in producing a new plane family] is that at least it needs to be 20 per cent, if not 30 per cent, better than the last aeroplane.”

Updated: May 24, 2023, 3:30 AM