Jan 2020
We cannot ignore the major threat that continues to affect the aviation industry. As any news report or government briefing will remind you, the pandemic is not yet over. On the one hand, vaccination protection is improving, and governments are less focussed on lockdowns and travel bans than they were in 2020. The industry is also better prepared and, in many cases, ‘slimmed-down.’ On the other hand, many airlines and operators are increasingly suffering financially after two years of disruption. Whatever the next restrictions are, there is unlikely to be much forthcoming government support for the industry or workers. The impact of future variants is, of course, unknown, and remains a significant risk.
Moving away from COVID, there are, of course, other factors to consider. In the UK and Europe, Brexit is a leading one. The UK has left the European Union (EU), but there is still plenty of related disruption to sort out. For airlines and operators, there are changes to ownership and operation, with companies becoming much more restructured to their own regions. Border controls and checks will become more strict, too, with the removal of free movement. There are complications as well for pilots. Pilots operating EU registered aircraft will require an EU license, and similarly, UK pilots will need a UK license. There are some short waivers in place, but the impact is getting closer.
The price of oil, and hence aviation fuel, has risen significantly since 2020. It may be some way off the high levels seen over the last decade, but it is still of concern to airlines. Fuel is one of the main costs of airline operation (around 30% by some estimates), and any increase has the potential to significantly affect profitability. Of course, airlines have strategies to hedge against rising fuel prices, but this has been especially difficult with unpredictable future requirements during COVID. Over the last 20 years, the oil prices have proved very volatile (moving from a high of $126 in 2011 to a low of just $36 in 2016 as just one example). As in many industries, an unpredictable situation like this is very to manage.
The aviation industry had always faced significant risks and challenges. With global operations and operating at the leading edge of technical development, operators are exposed to wide-ranging and unpredictable events. Added to this is a rigorous enforcement of safety standards. COVID-19 has introduced additional risks to an industry already well used to having to manage them.
