As part of our series delving into the megatrends affecting aviation, we sat down with dozens of companies across the industry, from airline associations like IATA to small suppliers at the granular end of the supply chain, to understand the risks that our industry faces and the opportunities on offer as aviation flies into the middle of this decade.
Rafael Schvartzman, IATA regional vice president for Europe, tells us that “the significant rebound in passenger traffic, which we hoped — and to a certain extent anticipated — would happen, has indeed happened, and it’s looking very strong, which is excellent. Significant parts of the world have already gone beyond these 2019 benchmarks, and the areas that haven’t quite caught up are either very, very close to it, or rapidly approaching.”
For many within the industry, this means that demand continues to ramp up faster than their ability to respond, and substantial uncertainty around geopolitical instability, overflight bans, world economies, jet fuel prices, and ongoing supply chain issues is a constraint on investment to grow their capacity.
“In addition to that,” Schvartzman says, “you have quite tight labour markets. Your cost of labour is increasing, and you can’t necessarily find the skills you’re looking for so easily. So there’s a lot of work that’s going on, in terms of diversity and inclusion, to increase the outreach to make sure we are making the most of the potential labour market out there, whether it’s gender or otherwise.”
At the very other end of the supply chain from global airlines sit small and medium enterprises like Donite Plastics, based to the southeast of Belfast. Business development manager Stephen Kissick confirms that the company is
“seeing increasing demand for new parts within the aerospace market as the sector returns to pre-pandemic growth. There is a higher demand for aircraft now than there was before the pandemic.”
While material availability remains a risk a reliable supply chain — including with clustering of industries in adjacent parts of the supply chain in the same geographic region — can help. Models might include formal clusters such as Hamburg’s, Toulouse’s or Montréal’s, or informal ones such as the thermoplastics, mouldings, and materials grouping in Northern Ireland.
“Customers are looking for more reliable, collaborative and agile partners that provide stability and can react to fast-changing situations. With a long-term partnership, there is less risk in the supply chain,” Kissick says. “The growth in the aerospace sector is a massive opportunity… we have had a lot of interest from customers across Europe and the United States particularly. This is something that’s also extended across sectors, including the electric vehicle and transport markets. We also see opportunity in being a sub supplier to the original equipment manufacturers: having the ability to offer them higher level assemblies, and supplying more finished parts.”
Sustainability remains an overarching theme
It’s no surprise that sustainability is still an industry priority, as Donite’s near neighbours IPC Mouldings’ managing director Joanne Liddle tells us. “Sustainability is a key consideration, and part of our strategy going forward in being a responsible business,” she says. “We want to be part of positive change and we have ambitions around clean tech and the drive to reduce carbon emissions. We recognise the need to do better, and we’re committed to respecting the people, environment and communities in which we operate.”
This priority is echoed throughout the industry, from the SMEs that form the backbone of much of the aviation supply chain through to airlines.
“After safety, it’s probably the biggest major priority for the industry, which we all share, which is to ensure that we become as sustainable as possible as quickly as possible,” IATA’s Schvartzman says. “I think it’s reasonably accepted that aviation is probably one of the hardest, if not the hardest, sector to decarbonize completely. So it requires significant, coordinated effort, not just from airlines or even the industry, but actually from governments and all the energy and transportation chain. It’s a huge collective effort.”
IATA sees pressure — within aviation, with other industries, and with governments — to develop more sustainable aviation fuels as a critical move here in the short and medium term.
“The industry has embraced the importance of creating a more sustainable future,” Monica Wick, founder and chief executive officer of RedCabin, which runs conferences across transport industries, tells us.
Yet this is a complex series of calculations, Wick explains. “Weight reduction of products is often the first solution for manufacturers. While this does inevitably increase sustainability — reducing fuel consumption for example — this does not consider the manufacturing process itself, nor the materials used. The industry is on the cusp of a new generation of aviation innovation with sustainability a key consideration, alongside passenger comfort and control. It will be critical that regulation evolves to reflect the development of lighter and more sustainable materials for use in the cabin.”
Interiors, cabin, and connectivity upgrades are growing in priority — yet capacity and delivery remain challenging
Across the industry from airlines to MRO houses and in-between, the need to upgrade the passenger experience is a common theme, and this part of the industry is a representative example of key challenges.
“Our latest research gathered from industry executives at the Aircraft Cabin Innovation Summit held in Seattle in September revealed that passenger comfort remains a key area for improvement in the aviation industry, something we believe will continue to top the aviation agenda in 2024,” RedCabin’s Monica Wick says. “Key cabin interiors innovations will relate to privacy, comfort and control. People want to travel in increased comfort. Demand for premium cabins has increased and this is driving new thinking about future cabin layouts and designs — the more flexible the better!”
RedCabin’s research suggests that some 70 percent of respondents see passenger seating as a priority for innovation, with 40 percent citing connectivity updates. However, budget constraints remain a key innovation limitation according to 56 percent of respondents, with a lack of collaboration being a blocker for 54 percent.
Within this context, aviation is pushing to digitalise, engaging upwards and downwards within their supply chain with customers’ and suppliers’ digital tools, often at the forefront of regulator expertise in the field.
“Digital tools and methodologies are increasingly being used across the supply chain and within our business to improve efficiency, reduce waste and optimise value,” IPC Mouldings’ Joanne Liddle highlights. “The Internet of Things generates a large amount of data to optimise operations and improve performance. As an extension of our customer, we use portals to facilitate the flow of information and knowledge allowing us to connect and collaborate, giving real time visibility on orders and forecasts.”
That visibility is crucial to the industry.
Liddle summarises the risks to the supply chain at present as threefold: “the unpredictable forecast impacts SMEs’ motivation to invest. Erratic orders, push outs and cancellations cause supply chain issues and risk to on-time delivery. Uncertainty causes potential loss of expertise and risk to quality.”
The solutions to these risks are common threads across the industry: strong relationship management with clear demand signalling as early as possible, including transparent communication. As part of these relationships, long-term planning and partnership commitment can bring added value, better efficiency and more resilience. With all the technology in the world, the trust comes back to a very human factor: relationships.
Author: John Walton
Published 30 January 2024
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