The Corona pandemic has hit the aviation industry hard. But after an unprecedented slump, the industry is showing the first signs of recovery. A recent study by the global management consultancy Kearney examines the current situation at 35 major airlines and shows that, despite positive developments, significant challenges remain. Low-cost carriers (LCCs) are gaining market share, there is an acute shortage of pilots, and the industry could face a revenue dilemma. This article analyzes the results of the study and discusses the future challenges and opportunities for the aviation industry.
With a value added share of around one percent of global gross domestic product (GDP) and an annual market volume of more than 800 billion US dollars (approx. 735 billion euros), aviation is an important economic sector. According to the Kearney study, spending on air travel has recovered to 2023 percent of global GDP in 0,8 after falling sharply due to the pandemic.
Holiday travel in particular saw a sharp increase in 2021 and 2022. Global available seat kilometers (ASK) rose to 2023 percent of pre-pandemic levels in 95. Low-cost carriers (LCCs) such as Ryanair and Wizz Air benefited most from this recovery, while traditional airlines such as Lufthansa, Austrian Airlines and Air France/KLM had greater difficulty returning to their pre-crisis production levels.
Low-cost carriers on the rise
Low-cost carriers have increased their ASK faster than legacy carriers after the pandemic. Wizz Air recorded an increase in available seat kilometers of over 2023 percent in 17 compared to 2019, while Austrian Airlines and Air France/KLM were about 10 percent behind their pre-pandemic levels.
Philipp Bensel, partner at Kearney, stresses that the recovery in Europe has been uneven. LCCs benefited from their agile structure and lower layoff rates during the pandemic, while traditional airlines are struggling with structural and operational challenges.
Five key factors in the aviation industry
The Kearney study identifies five key factors that will influence the recovery and future growth of the aviation industry:
- Purchasing power: Business travel is recovering more slowly than tourism. New guidelines that recommend train travel instead of flights and changing business practices such as increased online meetings are reducing demand for business flights. The tourism segment is also expected to slow down in the medium term. Customers' decreasing willingness to pay could lead to falling ticket prices.
- Crew on board: A significant shortage of crew members, especially pilots and flight attendants, is posing major challenges for the industry. It is estimated that there could be a shortage of almost 2032 pilots worldwide by 80.000. Training new pilots is time-consuming and expensive, which exacerbates the situation. LCCs, which made fewer layoffs during the pandemic, are doing better here and are now increasingly attracting staff from traditional airlines.
- Airport staff: Staff shortages at European airports led to significant disruptions in 2022 and 2023, especially during the summer season. This forced airlines to reduce their flight frequencies. Madrid Airport was able to maintain its workforce thanks to government support and thus recover more quickly.
- Maintenance personnel: Layoffs and reduced training during the pandemic have led to shortages of maintenance personnel, resulting in longer turnaround times and maintenance backlogs. The increasingly ageing aircraft fleet is further exacerbating the problem.
- Aircraft manufacturers lag behind: Production outages and increased demand following the pandemic are leading to delays in the delivery of new aircraft. This is hampering airlines' capacity to meet rising passenger demand and retire old aircraft. Global aircraft orders reached a new high of 2023 units per year at the end of 16.000. To cope with demand, airlines are reactivating older aircraft and extending leases.
Strategies for the future
To overcome the challenges, Kearney recommends several strategies:
- Alternative aircraft procurement: Airlines should extend the life of existing aircraft through reasonable maintenance checks and enter into strategic agreements with wet-lease companies.
- Increasing crew productivity: Improved data transparency and process optimization can increase crew productivity and reduce costs. Long-term disadvantageous working arrangements must be renegotiated.
- Scenario-based planning: Forward-looking planning helps to better manage future bottlenecks and uncertainties. This includes revenue planning that is based on demand and personnel planning that focuses on critical areas.
The aviation industry is facing major challenges after the pandemic, but is also showing initial signs of recovery. Low-cost carriers are benefiting from their flexible structure, while traditional airlines are having to make structural adjustments. Through targeted strategies and innovative solutions, airlines can strengthen their resilience and secure long-term growth. As a consulting firm, Kearney remains an important partner for the industry and supports airlines in overcoming their complex challenges.
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