Roberto CoelhoBy Roberto Coelho|December 21, 2021|7 Minutes|In Opinion

Opinion

"How do you become a millionaire in aviation? Start with a billion!"

How do you become a millionaire in aviation? Start with a billion! Before COVID,it appears there were no alternative options to business meetings or family gatherings. This quickly changed after widespread lockdowns were implemented and the world discovered the app which recently celebrated its 10th birthday: Zoom.

However, before recapping the COVID nightmare let us remember the 2019 horror story.

Now a distant memory, but as the calendar year changed to 2020, global news was focused on two deadly airplane crashes.

On separate occasions, two Boeing 737 Max planes forcibly overrode the pilots and forced the planes down.

For those unfamiliar with the events, I use the word forcibly with the literal meaning. The system had an error and forced the nose of the plane down resulting in the deaths of over 500 souls.

“Buying an airline ticket is like going into an operating theater. You put your life in someone else’s hands and hope you come through alive.”

To decode the complex airline jargon and confusing data, I turned to Guy Leitch, founder of SA Flyer Magazine.

After the two crashes, the airline industry crossed a Rubicon. The Federal Aviation Administration(FAA) based in the United States lost their reputation as the world’s leading flight safety body.

“There is no doubt the FAA has lost its reputation as a ‘rubber stamp’ leader.”

This may be a microcosm of the United States losing their previous global influence.

The FAA were slow to ground the Max as other countries led the way grounding the jetliner. The plane has only started flying this year.

“Boeing will take a long time to recover from the set back of the Max grounding and the reputational damage.”

Boeing aside the airline industry, which is traditionally very cyclical, is experiencing a severe trough.

With the identification of COVID-19 in 2020, governments shut borders and populations panicked, the airlines felt the brunt of international isolation.

 

IATA data released in December 2021, suggests international air travel is down 55% from 2019 levels.

“I don’t think any airline can be profitable in this environment,” says Leitch.

The resulting question is will air travel return to 2019 levels. The answer is yes, the unknowns are when and has business travelled changed forever?

Leitch refused to predict the future, “It is impossible to tell, anything will just be guessing.”

The recently identified Omnicom variant is a perfect example of the unpredictability of the future.

Omnicom led the international community to block air travel to South Africa. Ironically, two weeks later the UK, who began the block, was blocked by France.

In this world, airlines are at the liberty of governments as they weigh the risks of tourism.

Airline executives can do very little to overcome this burden. But in this ever-evolving world, there are other challenges which they can face head on.

In November,aircraftCO2 emissions were placed under the microscope, after global leaders hopped on these very same aircraft to attend COP 26 in Glasgow.

Yet, Leitch feels this criticism is incorrectly placed, “the airline industry has been very proactive about meeting environmental demands.”

For years, Boeing and Airbus have created economical aircraft, and airlines have purchased these aircraft in large numbers.

The airline industry has a target of becoming carbon neutral by 2050, while only currently contributing 3% of global emissions.

When emissions are discussed, the conversation naturally turns to Tesla’s successful take-off over the past decade.

But aircraft will not follow the same trajectory, “aircraft don’t lend themselves towards electrification. Batteries don’t get lighter as they are depleted as with fuel.”

When an airplane takes off full of fuel it will land with an empty tank, but a batteries weight is constant.

There is the possibility of hydrogen fuel, however, this is still in the experimental phase.

Following this theme of experiments, are extreme long-haul flights.

For example, the test case of New York to Sydney at 20 hours in the air.

These experiments bring into question the feasibility of the hub and spoke model.

“It is still the most effective way, but there is a return to more direct flying. Point to point is less layovers but more expensive as planes burn half a tank of fuel climbing.”

The success of air travel is based on the mix between convenience and cost, if the cost is too high this negates convenience.

After reviewing the challenges facing the airline industry, one is able to understand Richard Branson, the founder of Virgin Atlantic quote; “the quickest way to become a millionaire in the airline business, is to start out as a billionaire.”

As Leitch says, “airlines are incredibly capital intensive, very tech and skill heavy with paper thin margins.”

Yet, we all hope they continue battling it out for these scraps, allowing families to reunite and individuals to explore!

After all, the only way to overcome fear, is to face it.