The headlines might be suggesting that Airbus is being overly optimistic about aircraft demand, but a closer look at the aircraft manufacturer’s forecasts do not suggest an expectation of a rapid return to normality.
A statement issued on Thursday (May 27), which was notionally aimed at Airbus’ suppliers, asserted that “Airbus continues to expect the commercial aircraft market to recover to pre-COVID levels between 2023 and 2025, led by the single-aisle segment. The company is therefore providing suppliers with an update of its production plans, giving visibility in order to schedule necessary investments and secure long-term capacity and production rate readiness, in line with the expected recovery.”
Therefore, the worlds largest aircraft builder does not expect the market to recover for at least another two years. Admittedly this may include a lag between airlines experiencing higher demand and them ordering new aircraft, yet it is hardly a scenario of immediate resumption of the levels of air transport seen at the beginning of 2019.
IATA seems to agree. In a presentation by the organisation’s Chief Economist, Brian Pearce, IATA said that there would be a “long-term loss of two years growth” with a “strong rebound when border travel barriers removed but not full recovery”. Overall, the market is expected in 2022 to be 88% of the size it should have been if it were not for the crisis.
The geography of this recovery will be uneven, with the faster recovery being in China, this having the effect dragging further to the east the centre of gravity of the air transport economy.
The implications for the freight market of such a slow recovery are significant. There is unlikely to be a return to the very low rates and overly plentiful supply of belly-freight in the immediate future, rather with moderately paced re-introduction of passenger services prices are likely to have quite a noticeable floor. Combined with a consumer economy that continues to grow robustly, the air freight market is likely to see the balance of supply and demand continuing tilting towards the latter.
Source: Transport Intelligence, June 1, 2021
Author: Thomas Cullen
