KUALA LUMPUR, May 22 (Bernama) -- In recent years, ensuring sustainable operations has become a primary driver for aviation businesses, and yet this dynamic industry faces a multitude of challenges that can impede companies' efforts to enhance profitability.
In a statement, Avia Solutions Group Chairman, Gediminas Ziemelis said the aviation industry has experienced a significant drop in demand for air travel, resulting in many airlines facing financial losses, in recent years and has highlighted 10 big challenges for passenger aviation sustainability for the next three years.
To stay afloat during this time, airlines have taken on additional debt, but this increased debt has resulted in higher risk for lenders, leading to higher market interest rates for the airlines.
In addition to the impact of the pandemic on the industry, other factors such as rising fuel costs and increased competition have also contributed to the financial struggles of many airlines.
Another challenge passenger aviation face is compensations for flight delays will impact airlines' unplanned costs. In 2019, EU airlines carried a total of 1.12 billion passengers, with 1.7 million flights experiencing delays and resulting in a total compensation pay-out of €6.3 billion. Only 10 per cent of affected passengers currently file complaints directly with the airlines or via specialised service companies. (€1 = RM4.90)
In addition, LEAP engines challenges will impact more aircraft on the ground and shortage of capacity, while Original Equipment Manufacturer (OEM) production and supply chain disrupted during 2023-2025 will cause a shortage of aircraft capacity.
The COVID-19 pandemic has had a profound impact on the aerospace industry with OEMs such as Boeing and Airbus have experienced significant disruptions in their production and supply chains.
The aviation industry also faces a constant demand for new pilots, as approximately three per cent of pilots retire annually. However, the COVID-19 pandemic has caused a major setback in the industry, with all cadet programmes being either postponed or cancelled causing pilot shortage and rapid increase in costs for airlines.
Another challenging situation in the industry after COVID-19, has pushed airlines to take on additional debt to finance various aspects of their operations, such as spare parts, maintenance, repair and overhaul (MRO) services, and aircraft leasing.
However, the increase in outstanding debt for the industry could have significant implications, with some airlines potentially struggling to pay off their debts, which could result in a reduction in capacity as airlines are forced to ground some of their aircraft or cut routes to minimise costs.
-- BERNAMA
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