Airline and aviation trends show optimistic but challenging conditions for 2022
Needless to say 2020 and 2021 have been very challenging years for the travel industry, especially for airlines, airports, aircraft manufacturers and hotels. While there will still be challenging conditions in 2022, there is more optimism compared to 2021.
Vaccine boosters, pills and technological advances and the easing of restrictions will dictate the tone of the travel business and market for much of 2022. With this in mind, we thought we’d take a look at what we can expect from the aviation industry in 2022, especially after plenty of ups and downs in 2021.
The pandemic and the new Covid-19 variant will continue to take its toll
Several governments continue to keep or reintroduce travel restrictions amid the rise of new variants. The global health crisis is far from over. In the long term, industry stakeholders will be keen to find a balanced approach. So, rather than outright border closures, vaccination and testing requirements will likely be the standard in many regions. One thing for sure is that face masks requirements will remain prevalent in most markets throughout the year.
U.S. CDC loosens isolation guidelines. The Centers for Disease Control and Prevention cut its recommended isolation time to five days from 10 for individuals who have tested positive for Covid but are asymptomatic.
Due to increased Covid-19 infections among pilots and flight attendants, more than 3,800 worldwide flights have been canceled the last few days of 2021, over 2,200 of them that were scheduled to fly in or out of the United States, and over 8,800 flights around the globe were delayed by the first days of 2022.
Air Safety trends are very positive
2021 was one of the safest year to fly, 81 people lost their lives in four fatal air accidents worldwide last year, compared with 1.3 million who died on the roads. Far fewer people died in aviation tragedies in 2021 than in the previous year, a review of air safety reveals.
Aviation Safety Network trends clearly show the lowering of the number of fatal accidents per year involving commercial (passenger or cargo) flights of aircraft certified for 14+ passengers since 2000, and even more sharply since 2012: https://aviation-safety.net/statistics/period/barometer3.php
New low-cost international airlines
There have been several low-cost startups emerging in 2021, like Island’s PLAY and Norway’s Norse Atlantic Airways who have managed to raise capital and are marketing themselves in Europe. With some experience under their belt, planned transatlantic expansions should be a seamless transition for the airlines. Those that have been slightly longer in the game will also be expanding their networks. For instance, French bee, which recently launched services to New York, will be heading to Los Angeles next spring.
There is also plenty of potential heading eastward with airlines looking to offer low-cost long-haul solutions. Flypop is edging closer to deploying its A330s to India from the United Kingdom in order to cater to underserved markets.
McKinsey consulting believes that there are limitations to the LCC model in the long-haul market. A few airlines have begun to apply the low-cost model to long-haul, intercontinental routes. Long-haul routes are highly attractive; in the United States they account for about 40 percent of mainline operating revenues and over 90 percent of operating profits. The successful low-cost short-haul model is difficult to replicate on long-haul routes.
And while there is significant opportunity for a lower-priced, lower-cost model in long haul, we believe that mainlines can and ought to capture it. And if they act quickly, there will be no need for—and indeed no room for—new entrants in the long-haul market. It is likely that the established long-haul airlines will respond to the low-costs by matching the prices of the newcomers, lowering the cost of leisure travel for North American and European travelers, and drive them out of business.
U.S. Domestic shakeups
The big four United States carriers have held a market share of over 80% in recent years. Forbes notes that this figure will drop to just 60% in 2022. There are risks to starting an airline in any economic climate. But during a pandemic? The entrepreneurs behind the budget airlines see an opportunity to provide super low-cost service in markets not served by the established airlines.
The likes of Breeze Airways and Avelo Airlines have gotten off to a strong start. Meanwhile, the more experienced players such as Frontier, JetBlue, Spirit, and Allegiant will continue to take advantage of the new domestic focus in the US to grab a greater market share.
Three external factors will be critical to the new airline’s success. They include pent-up demand for travel; improvement in the economy; and the continuation of positive news about the pandemic and vaccine availability, which will make people feel more comfortable about the prospect of flying.
Online shopping fuels the cargo boom
2020 and 2021 saw a significant rise in cargo activity amid new consumer habits backed by the e-commerce boost. The urgent need for medical supplies also fuelled the increase in operations. The rise is continuing into 2022. IATA reported that there was a 9.1% increase in air cargo demand in September. October then saw a 9.4% increase.
Over the past years due to the emergence of E-commerce all over the globe and it sustained the pandemic without losing the phase. The above-mentioned factors combined with the extensive demand for vaccine transportation made the air cargo sector a lifeline for many countries. It is believed that the demand in 2021/22 will surpass the 2019 levels, even reaching the highest demand in the history of aviation: 69.3 million metric tons.
As a result of this pattern, airlines such as Qantas have recently been converting their aircraft into freighters. Moreover, there has been a plethora of orders for freighters such as the Boeing 777F and Airbus A350F.
Amazon, UPS, FedEx and other cargo carriers are ordering the classic Boeing 767-200ERF freighter and 737-800(BCF) converted passenger jets. Airbus has been converting passenger A330-200s into A330-200(P2F)s to increase cargo capacity, predominantly to meet demand from the e-commerce sector, and is looking to develop a new freighter version of its A321neo passenger aircraft.
Long-haul narrow-body jets triumphs
For nearly half of the entire history of commercial aviation, long-haul flights have conjured up images of large, wide-bodied aircraft, with two aisles, up to 10 seats in every row, spacious overhead bins and, more recently, shiny on-demand tablet-style entertainment systems.
That’s in sharp contrast to smaller narrow-bodied aircraft, with their single aisles, six seats per row and, generally, less space and comfort. It is also back to the future, or to the start of the jet age in 1958 and the early 60s, when the Boeing 707 and the Douglas DC-8 first started flying, at nearly the speed of sound, across the oceans, landing to refuel every four or five hours.
There are three planes in the latest generation of narrow-body aircraft, with the latest fuel-efficient engines.
- The first is the Airbus A220, formerly the Bombardier CSeries, which is the smallest of the lot.
- The second largest is Boeing’s 737 MAX, an update of its venerable 737, although its low-slung design means its engine size is constrained compared with the others, so it’s not truly a long-haul machine.
- But the third is the real player: the Airbus A321XLR, the most recent member of the A321neo family, an updated version of Airbus’ short-haul workhorse with new internal fuel tanks.
- The A321XLR can fly far as those early 707s and more than half again: up to 4,700 nautical miles, or around 10 hours — something like the distance from Florida to the UK, or from Beijing to France.
2021 saw the Boeing 737 firmly become a mainstay at airports after its return to the skies from the end of 2020. China has also laid the foundations to re-certify the type, setting a strong platform for the type next year.
On the Airbus side, the A321LR helped JetBlue inaugurate transatlantic service to the UK from New York this year. The model has also been performing well across the ocean with TAP Air Portugal.
With a single-aisle option a more economical solution on certain routes, especially during periods of downtime due to restrictions, we can expect more international narrow-body services.
Passengers are continuing to get used to traveling on a narrow-body on long distances. The long-haul narrow-bodies can have the same seats as long-haul wide-bodies and be just as comfortable and now have the choice of a nonstop flight and cutting several hours off your journey.
The A380 superjumbo might make a comeback
Several airlines announced the return of the Airbus A380 to the skies late 2021. We can expect a fair number of units in the air by the time 2022 gets in full swing, mainly with mega-operator Emirates.
British Airways this month announced that it added three US A380 destinations for the summer of 2022, Etihad is considering might do the same in 2022. Additionally, Singapore Airlines is planning a notable increase in flights with the jet for the same period, with eight destinations on the cards, including a fifth freedom flight to New York JFK from Frankfurt.
New aircraft development
We will see breakthroughs with several aircraft under development. For instance, the A321XLR is expected to perform its maiden flight in 2022. Additionally, the MC-21 will be introduced in Russia.
We can also expect progress with the 777X program, which is expected to enter service in two years. Other new aircraft programs such as the A350F will also have major announcements.
Supersonic jet development and testing is advancing faster. Over the past decade, a number of aerospace engineers and entrepreneurs have been revisiting the Concorde’s demise. Supersonic commercial air travel is, according to aerospace startup Boom Supersonic, coming to airports near you in the future, with commercial flights expected by 2029. Boom, an aviation company based in Denver, Colorado and has assembled a team that includes accomplished former NASA, Boeing, and Lockheed Martin engineers to design a working successor to the Concorde.
NASA’s Silent Supersonic Jet X-59 NASA’s Silent Supersonic Jet X-59 is designed to transform the supersonic aircraft industry. Lockheed Martin’s Skunk Works-built QueSST is anticipating an eventful 2022.
Is Boeing coming back in 2022?
2021 has been a roller coaster for Boeing. The earlier part of the 2021 was full of optimism as its 737 MAX was re-certified in many key markets around the world, and the MAX’s re-entry into service for many carriers around the world was massive for Boeing in 2021. The word “win” might be too generous given the background of the situation, but it was certainly a much-needed story of recovery and redemption.
With the 737 MAX program back on its feet, Boeing’s 787 program requires the most attention going into 2022. According to Boeing’s unfilled orders report, the company has a backlog of nearly 500 jets. Some of these orders aren’t scheduled until further into the future.
However, this positivity was dampened by issues surrounding its 787 program- a situation that continues to plague the company as deliveries remain suspended. Less pressing but still significant is the drive to get the 777X into service. Having lost notable loyal customers to Airbus recently, and delivery numbers falling significantly behind Airbus.
The 747 program will come to an end in 2022, paving the way for Boeing to concentrate on other projects or even start fresh on its much-speculated clean sheet design of the 150 to 250 seat aircraft to replace the old 737 design. Hopefully, 2022 will be the year we finally get some solid details on a 797, but this is far from guaranteed.
The company seems confident with its current 777X schedule, and any update on the aircraft will see a boost in morale for the firm. Previously scheduled to enter service in the summer of 2020, Boeing’s management has since shared that certification of the 777X may not occur until late 2023. With the growing market interest in the Airbus A350-900 Freighter, Boeing has been also pitching the cargo version of the 777-8 to its client airlines to replace older 747-400F or 747-8F in service now.
Sustainability priorities
This year was notably concentrated around sustainability. IATA member airlines have been making many announcements on the subject and Airbus hosted a summit about the topic, and COP26 was heavily focused on the aviation industry’s role in climate initiatives.
While there has been a lot of talk about sustainability, we will see more action in 2022. Airlines will be utilizing sustainable aviation fuels (SAF) much more. Meanwhile, we can expect more firsts when it comes to electric and hydrogen solutions. eVTOL programs will be taking the next step to overhaul local networks this decade.
Expected shortage of flight crews and ground staff
With the expected demand for air travel ramping up from 2022, aircraft movements will escalate significantly, creating a shortage of pilots, cabin crew, and other ground staff.
As per the Oliver Wyman analysis, in 2022, pilot demand will surpass the active number of pilots and continue to grow over the decade, creating a shortage of 60,000 pilots over the globe.
For the period of 2021 January to 2023 January, the number of active pilots will increase by nearly 43,000, making these two years the most dynamic era for the aviation and aerospace industry. Normally, it takes somewhere around 24 months to train a pilot and student pilots who have started their flight training in 2021 will be absorbed into the industry in 2023: allowing a vacuum in the time between.
Better finances
Global airlines projected a sharp reduction in industry losses next year as a multi-speed recovery from the Covid crisis gets under way, but revised up the financial toll inflicted by the pandemic in 2020 and 2021.
The International Air Transport Association IATA, the industry’s main trade body, predicted that:
- Net losses at airlines would narrow to $11.6 billion in 2022 from $51.8 billion this year.
- Net losses for 2021 were revised up from $47.7 billion estimated in April.
- Net losses for 2020 to $137.7 billion from $126.4 billion estimated earlier.
While airlines across all regions are expected to perform better, those in North America are forecast to return to profit next year. As governments are viewing inoculations as a way out of the health crisis, IATA’s Walsh said vaccines need to be made available to anybody who wants them.
- North American domestic travel demand is estimated to reach 93% of the pre-pandemic level in 2022, an improvement of 20 percentage points from this year.
- Total passenger numbers are expected to increase to 3.4 billion next year from 2.3 billion in 2021, but will be below 4.5 billion in 2019.
- Passenger revenue in 2022 is expected to jump about 67% year-on-year to $378 billion.
- Air cargo is forecast to remain a bright spot, with demand seen rising 13.2% above the 2019 levels.
At the end of this year, several airlines have been announcing that they are making progress on their exits from bankruptcy. For instance, LATAM filed a restructuring plan in November. Furthermore, Avianca exited Chapter 11 protection this month. Numerous airlines also recently reported profits for the first time since the pandemic began.
With the hope that society will be better adapted to the conditions of the health crisis by the time 2022 is over, those that have battled with long-term financial difficulties, such as Air India, with its new ownership, and South African Airways, will be looking to overturn their fortunes.
Even though 2021 was a tough year for aviation by usual standards, there was significant progress compared to 2020. The industry will be hoping for far more frequencies, passengers, less labor issues and profits for 2022.