Return of the Max and the return of hope

Just like the stock market, the aviation industry climbs or descends on sentiment about tomorrow as much as the hard data of today. Covid travel restrictions remain firmly in place around the world, many airlines face a deepening cash crisis, and infection, hospitalization, and death rates from the disease are, if anything, getting worse. However, there is finally a sense that an end to this mess is in sight thanks to developments in finding vaccines and, to a lesser extent, rapid testing.

This is reflected in the rush of forward bookings with leisure carriers for the next northern hemisphere summer, with plenty of families yearning to escape to the sun and banking on a return to near-normality for air travel by mid-2021. Long-haul travel, especially for business, is likely to lag – some think by years rather than months – but a global economy relies on sales trips, conventions and social networking that virtual meeting tools simply cannot replace.

Eventually – the question is when rather than if – rising traffic will feed through to aircraft orders, activity for maintenance shops, and, yes, demand for flightcrew. For any pilot forced out of what had been their dream job, being told that the industry will soon need to recruit again might be of limited comfort. But, given the numbers who will choose to leave aviation permanently during this crisis, it may not be too long before airlines are once again facing a deficit of pilots.

The announcement that the US Federal Aviation Administration has cleared the Boeing 737 Max to return to service after almost two years will have been welcome to both the Chicago-based manufacturer and dozens of operators of the re-engined narrowbody. However, the market the aircraft is coming back to looks very different to the one that existed when it was grounded in early 2019, and both Airbus and Boeing were struggling to keep up output to meet single-aisle demand.

Boeing faces two big challenges – how many Max aircraft to continue producing in 2021 when it has around 400 already built and waiting for customers. Even if traffic recovers rapidly, most airlines still have considerable capacity slack in the system, and will be reluctant to add to their fleets. The other is something we referred to earlier – sentiment. Will passengers be ready to fly on an aircraft that became a tarnished brand after two fatal crashes in quick succession?

Southwest, one of the largest operators of the type, believes that only a “minority” of passengers will opt not to travel on a re-certificated Max. The Dallas-based airline has 34 of the aircraft stored at Victorville in California and another 233 on order. As for pilots themselves, the Air Line Pilots Association (ALPA) says it believes the engineering fixes mandated by the FAA will lead to the type’s safe return to service.

Low-cost airlines such as Southwest are likely to bounce back quickest from this downturn as consumers emerge from lockdown to take leisure breaks and visit family and friends. For carriers that depend on connecting passengers through an international hub and with a tiny or non-existent domestic market, the situation is very different, due to the likely lag in long-haul business traffic and complex quarantine rules across the many countries they serve.

Nowhere is this more evident than the Middle East, where Emirates, Etihad and Qatar Airways – long the darlings of Airbus and Boeing widebody sales teams because of their aggressive fleet expansion strategies – have seen their “global network” business models come to a near-halt. Abu Dhabi, Dubai and Qatar have all been heavily promoting themselves as Covid-safe destinations in their own right, but even a small surge in direct tourism will do little to offset a collapse in transfer traffic.

With IATA predicting that it will be 2024 before traffic through the Middle East returns to pre-Covid levels, this could have long-term implications for orders and deliveries, and for pilot demand. In its latest market forecast, Boeing predicts that the region’s carriers will need a fleet of 1,580 widebody jets by 2038, a fall of 15% compared with the estimate it made a year ago, and a bigger drop than the 10% the manufacturer reckons for the world as a whole.

There was good news, however, for the Middle East when it emerged that, following the landmark Abraham Accords between Israel and the United Arab Emirates, Etihad is to begin daily services to Tel Aviv. El-Al is also talking with the Abu Dhabi airline about a codeshare and cooperation agreement on areas such as crew training. As well as opening up tourism opportunities between the two countries, it will also allow Israelis to access Etihad’s extensive network out of its hub.