Commercial aviation has always felt the effects of external events such as war or the spread of dangerous viruses. Business collapses immediately. Small consolation: So far, airlines, airports and aircraft manufacturers have recovered from the setbacks fairly quickly and then even grew more strongly than before.
Aviation managers should not rely on this in the current crisis. Only the corona pandemic, which lasted more than two years, and now the Ukraine war could change global aviation in the long term. A new nationalism is emerging and threatening the industry’s business model of connecting people and cultures worldwide.
It started with the pandemic. Many states isolated themselves. In the meantime, most of their entry restrictions have been relaxed again. But countries like China are finding it difficult to return to normal.
This has consequences beyond aviation. Supply chains are disrupted, companies and politicians are being forced to look for alternatives to the bazaar economy. The discussion about a renationalization of the value chains is gaining momentum.
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Which, in turn, reflects on aviation. Intensive economic relations between countries fuel air traffic. People meet to exchange ideas, or service personnel are sent on site. If international economic relations shrink, the demand for flight tickets also decreases.
War in Ukraine fuels national tendencies
The war in Ukraine, with its enormous suffering, has destroyed hope that this new nationalism will soon be over. The longer it lasts, the stronger it forces national tendencies. In the end it could lead to a new Iron Curtain.
And again it is aviation that is one of the first sectors to feel the block formation. Russia wants to lift its corona travel restrictions from April 9th. However, this should only apply to those “friendly countries” in the eyes of the Kremlin. In other words, it only applies to those countries that do not support the sanctions imposed on Russia for the attack on Ukraine.
>>Read about this: How leasing companies are trying to get their jets back in Russia
It would certainly be manageable for global aviation if Russia were to fail as a market for a longer period of time. But it’s about much more than the Russian passenger market. What will become of the overflight rights, for example? European airlines in particular are already having to fly long and expensive detours to Asia. There is a high risk that this will become permanent.
The war also caused distortions in the aircraft leasing business. Until now, leasing companies could rely on getting their aircraft back if a customer had financial problems. Suddenly these international agreements no longer apply. Suddenly lessors have to be careful where they park their planes, otherwise they will be confiscated, as happened in Russia.
Insurance companies face billions in damage because the leasing companies do not get back the jets rented to Russian customers. This raises questions: will it still be possible in the future to insure aircraft that are rented out to customers in autocratic states, for example? How will lessors then deal with such customers? How will they manage the latent risk of such deals?
The forces of globalization could still prevent the world from being torn apart
At the same time, there is a lack of important sources of raw materials for the construction of aircraft, such as titanium. Although there are other countries that can deliver. But they will be well paid for by the big manufacturers in Europe and the USA.
Not to mention the airlines’ larger Russian customers who may be absent for years. Aeroflot has so far been considered a solid buyer of Airbus jets. Because the airline can no longer take over the A350, according to media reports, Airbus is already working on plans not to increase the production rate of the wide-body jet as planned for the time being.
The “bloc” still consists mainly of Russia. It is not yet clear whether a large new “Eastern bloc” will really emerge. But Russia is already drawing closer to China, a country known for using its own economic power to expand political influence. India is also looking for proximity to Russia.
Aviation earns its money from global networking. If it no longer exists or is partially interrupted, this is an existential threat for the industry. A threat that could go beyond what the sector experienced in the pandemic.
There is still hope that the forces of globalization will eventually prevail again. Perhaps these are large enough to prevent the global economy from dividing in two. However, very few would bet on it at the moment.
More: German aviation companies are left behind by the war.