Whilst the Club events schedule is on hold for the foreseeable
future, the Club has received several requests for assistance in recent weeks
arising out of the coronavirus crisis.
Our ever efficient Club Secretary, Philippa Ewart, has
fielded requests for help as diverse as an overseas government seeking the
support from a Member with extensive aviation sector crisis management
experience, to connecting a Member with two other Members in companies
operating in the air cargo sector, regarding the airlift of NHS purchased
emergency medical supplies from China to the UK. Philippa also receives
requests from the media seeking input from aviation experts. In recent
weeks I’ve heard the dulcet and knowledgeable tones of some of our Members on
the TV and radio commenting on the issues facing the aviation sector as a
result of this crisis; no better listening over my breakfast!
Philippa continues to manage such requests for
support. Should any Member need some assistance, or has an idea
regarding how the Club with its wide-ranging and experienced Members and their
extensive and diverse industry contacts can be of help during the current
situation, please liaise with Philippa and we’ll see what can be done.
The eminent aviation analyst Chris Tarry shared his views on the near, medium and also the longer-term outlook for the aviation industry at the Aviation Club’s quarterly Young Aviation Professionals’ Reception held at the RAF Club last week. His comments, here in a precis form, were in a sense out of date as he spoke, and have been updated to reflect the developments up and until 15 March, but do give a view as he sees it.
Chris spoke at the Royal Air Force Club.“The old clichés are still true ‘You ain’t seen nothing yet’. The COVID-19 crisis comes on top of the MAX debacle, where the fall in the oil price, whilst significant for a number of economies is of limited importance for the airline industry where the issue is one of precipitous falls in revenue and cash.
It is clear that the nature and pervasiveness of COVID-19 and the responses by governments, companies and individuals, have been quite different from any recent “pandemic events”.
In terms of reactions by companies, a much more evident “duty of care” in respect of their employees has resulted in almost immediate travel bans with the consequential impact on high value travel and forward bookings with the inevitable impact on cash.
Whilst Italy has become in effect the first closed market in Europe others are following. In terms of the potential impact, taken together the number of passengers flying to and from UK airports to Italy, Portugal and Spain combined is some 70million.
We had also seen airlines announce significant capacity reductions even before President Trump’s announcement regarding European flights.
For many airlines these latest developments have become an almost existential threat – the effective suspension of routes to the US are catastrophic for both British Airways and Virgin Atlantic. Beyond this the closure of other markets, to date Czech Republic, India, Italy, Poland and Spain, will inevitably increase.
Elsewhere for Finnair with the US, India and the majority of its Asian destinations effectively now closed life has become very difficult. The challenges facing Norwegian are well-documented. Managements at both a number of airports and airlines in Europe and elsewhere including the US are clear in their view that state aid is essential at the present moment – indeed to sustain the economic and societal benefits from aviation such support may indeed be necessary but it shouldn’t be open ended.
We have also seen employers react, as they have in similar situations by cutting, or more appropriately slashing, capacity to reduce costs and also lay-offs and employees taking “voluntary” unpaid leave.
Despite the fall in the fuel price this is in operating terms “de minimis” given the fundamental deterioration in the revenue environment, although it has resulted in some potentially significant hedging losses.
Whilst it would not be appropriate to suggest “who’s next” in terms of likely to fail, we are not only looking at the challenges but also at the opportunities and for whom and when.
My view for some time has been that the industry has had too much capacity. It is reasonable to expect a glut of pre-owned aircraft. This adjustment will provide opportunities for airlines and lessors to acquire aircraft at very attractive prices.
Whilst the market for air travel and indeed the stock markets, where “excessive valuations” had been evident for some time and a correction was overdue, they will recover. The questions are when and how quickly?
In the UK the government has implemented what is described as the delay strategy where the objective is to delay and reduce the peak of the outbreak of the virus. However, the reality is that just as many are likely to succumb to the virus as under the alternative strategy where the peak is higher and earlier. Flybe seems a minor issue.
There remains the issue of the environment restrictions, which despite managements setting out their strategies to reach net zero by 2050 has the very real potential to act as a very real constraint to growth over the longer term.
At the simplest level the impact of electric or hybrid aircraft is exceptionally limited and only applicable to small regional aircraft over any reasonable time horizon. Synthetic fuel is clearly an alternative but given the demands to find additional arable land to feed the growing population, plant-based feedstocks are a non-starter.
Even allowing for some technological breakthroughs synthetic fuel will cost perhaps 5-8 times that of fossil fuel (before the fall due to the actions taken by Saudi Arabia over the last week or so), something which will have an inevitable effect on demand.
At the present moment the total amount of synthetic fuel available in a year would provide enough for 36 hours flying by Lufthansa.
There is a real risk that not only might offsets become less acceptable, indeed to offset the emissions in 2019 some 180m trees would need to have been planted some 20 years ago.
Whilst the airline industry currently accounts for some 2% of global emissions, given what is happening elsewhere, and taking into account current technical developments in the airline industry, the continuing use of fossil fuel, and prevailing growth forecasts, this share could rise to 15% by 2050. Given this and the cost of substitutes it is almost inevitable that beyond the medium term there will be a need to revisit growth forecasts.
In summary the only conclusion is that as we have yet to reach the bottom let alone approach a turning point it will get worse before it gets better and where the short term in particular will be extremely painful and for some overwhelming. The emphasis must be on survival and how to compete and prosper are issues for another day when the shape and size of the remaining industry will be clearer.
Wrenelle Stander, group chief executive of Comair, BA’s South African franchise holder, was the Aviation Club’s guest of honour at the RAC last Wednesday (11 March).
Uniquely, due to COVID-19, her talk was via a video link from Johannesburg.Introducing herself with 25 years of aviation and energy industry experience, she painted a broad picture of the South African airline scene, a market comprising 16m annual passengers. Airline services are provided by a mix of state-owned and private carriers. Comair is in fact two airlines, one with British Airways painted aircraft, and Kulula, a low-cost operation. In 2018, it moved 5.8m passengers, has been profitable for the past 10 years but now finds itself with a loss.
Stander joined Comair in October 2018. Her previous posts included deputy CEO of the South African Civil Aviation Authority and director general at the country’s Department of Transport.
South African Airlines and the MAX are Comair’s big problems. SAA was placed in Voluntary Business Rescue on 5 December 2019 and owes Comair around £40m. With the MAX, the first of eight aircraft has been delivered.
Stander summed up her thinking by saying: “It’s been an eventual past few months. If someone told me that joining Comair would be such a rollercoaster, I would not have believed it. However, I would probably still have gone for it”.
An African success story will be the focus of the Aviation Club UK on 11 March, when the guest speaker will be Comair Group CEO and former head of Comair Airlines Wrenelle Stander.
Wrenelle Stander: 15 years at executive level.She was appointed in December as part of a restructuring at South Africa-based Comair, which operates scheduled services on domestic routes as a British Airways franchisee and as a low-cost carrier under its own Kulula brand.
Working for most of her career in what she acknowledges is a male-dominated business, Stander has more than 25 years’ experience in the aviation and energy industries, 15 at executive leadership level.
Previous jobs include periods as managing director of the Air Traffic and Navigation Services Company (ATNS), one of only three women worldwide to hold such a position; deputy CEO of the South African Civil Aviation Authority (SACAA) and director general at the Department of Transport.
Comair operates within South Africa, sub-Saharan Africa and the Indian Ocean islands and the group continues to form partnerships with industry leaders in travel reward and recognition programmes.
It holds a special place in aviation having achieved 72 years of uninterrupted profitable operations, and has been officially recognised as one of South Africa’s top employers for 2020.
Steve Dickson, Administrator of the Federal Aviation Administration, speaks at the UK Aviation Club about the Boeing 737 MAX, in London, Britain, February 6, 2020. REUTERS/Peter Nicholls
Boeing 737 MAX regulator comes to London
Steve Dickson, administrator of the US Federal Aviation Administration (FAA),
appeared at The Aviation Club UK, to discuss the status of the 737 MAX,
innovation in aviation, and the global landscape of the industry.
his perspective on the return of the MAX, Dickson said:
are not delegating anything, the FAA is retaining all regulatory functions.
Once approved this will be the most scrutinised aircraft ever, and I won’t sign
off the aircraft until I fly in it myself.
needs to focus on the process and stop making public statements about
also talked about the “close alignment” with other regulators on certification,
but should they want to take an additional timeline “that is ok.”
to home, on the regulatory landscape post-Brexit, Dickson said:
world places great value on the United Kingdom’s role in the global aviation
industry, and we are here for you.”
was sworn in last August after being confirmed by the US Senate. He is a former
senior vice-president at Delta Air Lines.
Aviation Club is the UK’s leading high-level forum for commercial aviation –
attracting industry leaders from all over the world.
Last Saturday’s (25 January) maiden test flight of the new Boeing B777X will provide another topical subject to be discussed at next month’s Aviation Club lunch in London, with the man in one of the industry’s currently most controversial jobs as guest speaker. (see also in the issue Further MAX delay to summer confirmed plus AND FINALLY.
Steve Dickson: At the heart of controversy.Steve Dickson, administrator of the US Federal Aviation Administration (FAA), is at the heart of the B737 MAX controversy and is expected to give some indication of when the aircraft will be allowed to return to service.
He now also has the pending arrival of the B777X, the world’s largest twin-engine passenger jet, to deal with as well as the wider issue of safety regulatory issues post Brexit.
As a former senior vice-president of flight operations for Delta Air Lines and a strong advocate for commercial aviation safety and improvements to the US national airspace system, Dickson is particularly well qualified to carry out his new job.
He was sworn in as FAA administrator last August after being confirmed for a five-year term by the US Senate.
Bookings are now open for the Aviation Club gathering, which is on 6 February at the new venue at the Royal Automobile Club in Pall Mall. It is also a curtain-raiser for the organisation’s 30th anniversary this year.
As American Airlines again delays the date for bringing its Boeing B737 MAX fleet into service, next month’s Aviation Club lunch will be highly topical with the head of America’s Federal Aviation Administration (FAA), Steve Dickson, as guest speaker.
Steve Dickson: A strong advocate for aviation safety.Bookings are now open for the 6 February event, the club’s first lunch at its new venue at the Royal Automobile Club building in Pall Mall London, and a curtain-raiser for the organisation’s 30th anniversary this year.
As administrator of the FAA, Dickson leads the US equivalent of the UK’s CAA and will be speaking about the MAX and the wider issue of safety regulatory issues post Brexit.
He was sworn in as FAA administrator last August after being confirmed for a five-year term by the US Senate and having recently retired as senior VP of flight operations for Delta Air Lines. He is known as a strong advocate for commercial aviation safety and improvements to the US national airspace system.
■ American Airlines said last week that “based on latest guidance”, it expected the resumption of scheduled commercial service on its MAX fleet would be on 4 June this year.
The airline said once the aircraft was certified, it would operate flights for staff members and invited guests before the MAX was entered into commercial service.
Article courtesy of BTNews – https://www.btnews.co.uk/article/15581
Aviation Club Members and guests raised £3,398.18 over the course of 2019 for the Club’s official charity partner, Orbis UK. Money raised will help to save the sight of children and adults across the world, transforming lives. For further information on the work of Orbis UK, visit www.gbr.orbis.org
Warren East, CEO Rolls-Royce addressed a capacity audience on Thursday 5 December at the Aviation Club UK’s final lunch of 2019. East has cautioned that aviation’s share of worldwide emissions could hit 20-25%, up from around 2.5% today, if the industry ‘does not act quickly enough on sustainability. ‘
Speaking to a capacity lunch today at the Institute of Directors
Karl Brünjes, Chairman of the Aviation Club of the United Kingdom, announced
that the Club was literally moving down the road to a new home at the
RAC. Guest of Honour was Warren East, CEO of Rolls-Royce.
“2020 marks the 30th anniversary of the Club”, said Mr
Brünjes. “It has more than fulfilled the objectives of its founder
sponsors, which incidentally included Rolls-Royce, in creating an informal
high-level forum for commercial aviation here in London. From all over
the world the great and good in air travel have spoken over the last three
decades. Who can forget the occasion on 6 July 2005 when Geoff Dixon,
then CEO of Qantas, was handed a piece of paper and announced that the United
Kingdom had won the bid to host the 2012 Olympics. After lunch it was off
to Trafalgar Square to celebrate with the crowds.
“Following a long debate by the committee it was decided that the
Club had outgrown our current home. A detailed search found the Royal
Automobile Club most welcoming and I am pleased to say our first guest will be
Steve Dickson, FAA Administrator on 6 February. Hopefully he will be able
to talk positively about the Boeing MAX”.
Mr Brünjes said that 2019 had been a particularly successful year
for the Club with the expansion of the YAP (Young Aviation Professional)
programme, designed to introduce graduates into the industry, and a series of
international events supported by Airline Economics, a subscriber only
magazine, with happenings in Dublin, Hong Kong and most recently in New
York. He announced a quarterly ‘Forum Events’ programme of early evening,
informal events with fireside discussions and debates on topical industry
Looking back over the year he noted the speaker list was of the
very high standard that members were accustomed to. “We started out with
Robert Sinclair of London City Airport; followed by Johan Lungren of EasyJet;
Robin Hayes of JetBlue, who announced London as the airline’s 2022 target;
Paulo Mirpuri, who must be the only airline chief having been checked out on
the A380; Paul Griffiths in charge of Dubai Airport; and most recently Oscar
Munoz of United Airlines complete with a heart transplant. Maybe running
an airline is not that aggravating”.
“Looking forward guest speakers after Mr Dickson, it is Ms Wrenelle Stander, of South African airline Comair on 11 March, followed by John Holland-Kaye, CEO of Heathrow Airport on 23 April”.