The International Civil Aviation Industry under the Triple Dilemma

  Misfortunes do not come singly. The global civil aviation industry, which has been deeply troubled by the epidemic for more than two years, was caught off guard by the Russian-Ukrainian war more than a month ago, and was hit by the “3.21” China Eastern Airlines MU5735 aircraft flight accident. When will the global civil aviation industry in the trough take off again?
Accidents do not cause long-term hardship

  The tragic results of the “3.21” China Eastern Airlines MU5735 aircraft flight accident caused a great shock to people’s psychology. Looking back on the past, after the air crash, some people did stop or reduce their choice of air travel in the short term. However, from a long-term perspective, aviation is still the safest mode of transportation in the world, no one, and this has not changed.
  The direct losses caused by the air crash to airlines are obvious, including aircraft loss, accident investigation, compensation for family members, increased safety inspections, and grounding of related aircraft types. In addition to the impact on a single airline, there is also the global grounding of the Boeing 737 Max due to continuous air crashes due to design defects in 2019, which has brought huge losses to the world aviation industry and sparked a wave of doubts. But none of this has fundamentally shaken confidence in the airline industry.
  The stock market, which reflects expectations and confidence more, also supports this judgment. Before the “3.21” flight accident of China Eastern Airlines MU5735 aircraft, someone made statistics on the rise and fall of the aviation sector in the stock market after the five domestic civil aviation accidents since 2000. The results show that: the accident that caused the largest retracement of the aviation sector index It was the 2004 China Eastern Airlines Baotou Air Disaster, which fell 1.2% the next day, 6.42% after 1 month, and 12.77% after 3 months. However, judging from the overall situation of these several times, the average price increase or decrease was -0.07% one month after the accident, and +8.45% after three months.
  The consensus inside and outside the aviation industry is that an air crash will bring temporary difficulties, but it will not become an insurmountable obstacle.
  In the event of an air crash, in addition to search and rescue, it is also critical to take immediate safety measures. After the “3.21” flight accident of China Eastern Airlines MU5735 aircraft, the Civil Aviation Administration of China immediately launched a level I emergency response, quickly implemented the important instructions and instructions of General Secretary Xi Jinping and other central leaders, and issued the “About Strengthening Aviation Safety Work” as soon as possible. “Emergency Notice”, and deploy to carry out industry safety inspections. Subsequently, the Civil Aviation Administration of China set up a supervision team and went to North China and Southwest China to carry out safety supervision from March 29 to 31, 2022, in order to promote the in-depth inspection of the inspection work, effectively strengthen the investigation of hidden dangers, and highlight the implementation of responsibilities.
  The investigation into the cause of the accident is also underway. The reason for the accident is to avoid the recurrence of the tragedy, which is a more far-reaching response to the entire aviation industry. For example, Malaysia Airlines changed its cockpit rules immediately after flight MH370 disappeared. In fact, many of the aviation software and hardware equipment and regulations that we are accustomed to at the moment are the painful lessons from air crashes.
  One example is that passengers may feel that the economy class of an aircraft is quite crowded, but there are strict regulations on the minimum space between seats and the distance between seats and emergency exits. The seat design of current commercial airliners is to be the most effective evacuation of people on board in the event of an emergency. Part of the reason for this design is related to a plane crash in 1985. That year, a Boeing 737 of British Airways suddenly caught fire before taking off at Manchester International Airport, and an engine caught fire and the fire spread rapidly. Unfortunately, the lack of space between the seats and the bottleneck effect near the door prevented some passengers from evacuating safely. After the accident, the planemaker changed the interior design of the plane to make emergency evacuation easier.
  Or, in 2009, Air France Flight 447 crashed into the Atlantic Ocean en route from Rio de Janeiro, Brazil to Paris. It took search and rescuers two years to find the A330’s black box. After examining the recordings in the black box, the French Air Accident Investigation Agency believes that the main cause of the accident was the overreliance of two less experienced pilots on the automatic flight control system. Since then, both Airbus and Boeing have changed their operating procedures and focused more on manual training. The European Aviation Safety Agency has also published a notice to discontinue the use of older recording technology, recommending a minimum recording time of 2 hours for sound recorders in the cockpit.
  Now, the two black boxes in the flight accident of “3.21” China Eastern Airlines MU5735 aircraft have been found and analyzed. It is everyone’s expectation to complete the investigation of the cause of the accident as soon as possible to make future aviation safer.

Malaysia Airlines.

Some aircraft wreckage was found near the French island of Reunion in the Indian Ocean, which was identified as belonging to MH370.
War and epidemic are more difficult to deal with

  The reality that cannot be ignored is that the current international civil aviation industry is facing more serious problems from the impact of the Russian-Ukrainian war and the new crown epidemic that has continued since the beginning of 2020.
  For some airlines, the immediate impact of the Russian-Ukrainian war that broke out at the end of February 2022 is even worse than the new crown epidemic. After the war began, the United States and the European Union announced the closure of airspace to Russia as a means of sanctions; as a countermeasure, Russia announced the closure of its airspace to airlines in 36 countries including EU member states, the United Kingdom and Canada.

  The reality that cannot be ignored is that the current international civil aviation industry is facing more serious problems from the impact of the Russian-Ukrainian war and the new crown epidemic that has continued since the beginning of 2020.

  Russia’s vast airspace is an important passage between Asia and Europe or North America, and a must pass for a large number of international flights. After the airspace was closed, many airlines’ flights could only be diverted or cancelled outright.
  Among them, the most affected is Finnair. Because of its proximity to Russia, almost all of Finnair’s Asian routes have to be rerouted. For example, the flight from Helsinki, Finland to Tokyo, Japan can be reached after passing through Russia, Mongolia and China under normal conditions. The journey is nearly 8,000 kilometers and takes about 9 hours. After the closure of Russian airspace, Finnair can only circle a large circle, fly over the North Pole and Alaska, and then fly south to Tokyo. The journey increases to about 12,800 kilometers, which takes 13 hours and increases consumption in all aspects by at least 50%. .

  The aviation industry is so difficult, is there an option to leave? In reality, people have also seen pilots converted to car drivers.

  Titanium is an important metal used in the manufacture of aircraft, and Russia is a major producer of titanium. After the start of the Russian-Ukrainian war, the US Boeing Co. said it had suspended titanium purchases from Russia, while Europe’s Airbus still relies on Russian supplies for half of its titanium. If Russia cuts off or restricts the supply of titanium, the aerospace manufacturing industry is bound to face enormous challenges.
  Aviation fuel consumption is the bulk of airline costs, accounting for about 20%. According to the International Air Transport Association: As of early March 2022, jet fuel prices rose to $141 a barrel, up 27% from the previous month. It can be expected that many airlines will be directly affected and will eventually pass on the cost to passengers by raising fares; and the increase in fares will reduce the willingness of some passengers to travel.
  The fight against the new crown epidemic is another “protracted war”. Data from the International Air Transport Association in October 2021 shows that in 2020, the global aviation industry will have a net loss of US$137.7 billion; an estimated net loss of US$51.8 billion in 2021; and an estimated net loss of US$11.6 billion in 2022. This means that the new crown epidemic will cause the global aviation industry to lose more than 200 billion US dollars, which is equivalent to the total profit of the past nine years.
  Since the outbreak of the global epidemic, more than 25 airlines, including India’s Deccan Airlines, Canada’s Georgia Airways, Alitalia, American Compass Airlines, and British Flyby Air, have closed down. Some major airlines that have not closed down are also struggling with losses and layoffs.
  China’s civil aviation industry is clearly not immune. The “2020 Civil Aviation Industry Development Statistical Bulletin” released by the Civil Aviation Administration of China shows that due to the impact of the epidemic in 2020, the total transportation turnover of the entire civil aviation industry in China that year decreased by 38.3% compared with 2019.
  Judging from the financial report data, the revenue of several major domestic airlines in 2020 has almost all fallen sharply, and the net profit has all turned from profit to loss. Air China also made a profit of 6.4 billion yuan in 2019, and a huge loss of 14.4 billion yuan in 2020; China Eastern lost 11.8 billion yuan in 2020. According to statistics from the Civil Aviation Resources Network: Since the outbreak of the new crown epidemic, the cumulative loss of the entire domestic civil aviation industry has reached 211.1 billion yuan, of which airlines have lost 170.6 billion yuan and airport companies have lost 54 billion yuan.
  The National Civil Aviation Work Conference held in January 2022 gave the main tasks of civil aviation this year: “Strive to realize the overall turnaround of losses and increase profits in the industry without repeated fluctuations in the epidemic” and “overall recovery to about 85% of the pre-epidemic level” .
  However, 2022 has just entered the third month, and the new crown epidemic dominated by the Omicron strain has spread in many parts of the country, and the number of infections in some areas has reached a new high. Whether the goal of “turning losses and increasing profits as a whole” can be achieved, no one can make a conclusion at present.
Where is the way out for the civil aviation industry?

  For airlines, the impact of the new crown epidemic is not only a loss, but what makes them more distressed is that they are losing the ability to plan future routes and formulate fares.
  Relying on big data to adjust routes and fares, reduce costs and increase profits is an “open secret” in the aviation industry. Every airline has a huge database of seasons, routes, occupancy, fares, and more over the years. This system allows airlines to have relatively accurate capabilities for route planning and fare forecasting to maximize revenue.
  Once, this algorithm was tried and tested; but the global ravages of the new crown epidemic changed everything. The relationship between price supply and demand fails. In many cases, even if the fare is reduced to a “cabbage price” of a few yuan a piece, it cannot be exchanged for the increase of passengers, because they may try to avoid travel for their own health reasons. Or they are tied up by epidemic control measures.
  In addition to the price, the planning of the route is completely unpredictable, and everything becomes uncertain. The airline has no way of knowing how many people will board the flight after it reaches its destination, or whether the flight will actually be profitable.

The civil aviation industry has encountered multiple difficulties, but I believe this is only a temporary phenomenon, and the dream of the human air transportation industry will continue.

  For individual pilots and flight attendants, they face brutal income cuts and job losses. In the income composition of pilots and flight attendants, the “hourly wages” and “hourly allowances” for flying account for the most part, that is, they need to fly missions to obtain this part of income. Even in 2021, when the aviation industry has picked up slightly from the previous year, many domestic crews will be flying less than half of what they were before the pandemic.
  In addition to the sharp drop in income, the long-term grounding has also directly affected the professional development of individual pilots. According to the regulations of various airlines, only when the accumulated flight time meets certain requirements can they be eligible to be promoted from co-pilot to captain and instructor.
  What’s more serious is that if there is no flying practice for a long time, the pilot’s flying skills will inevitably reverse, which will affect flight safety and cause them to be “downgraded”.
  Generally, airlines will use the QAR (Flight Data Quick Decoding) system to monitor the flight quality of the pilots. Once one of the indicators is lower than the system range, that is, “overrun”, the pilot will “return” to the simulator for training. There is also a risk of being downgraded if the degree of “overrun” is serious.
  The aviation industry is so difficult, is there an option to leave? In reality, people have also seen examples of pilots changing careers to become car drivers and flight attendants to set up stalls. The reason behind this is that pilots and flight attendants have small life circles and single job skills. It is basically difficult to find other better jobs after leaving the airline.
  Flight attendants can also voluntarily resign, and many pilots cannot afford to resign. Training a pilot requires a lot of initial investment, so the labor contracts signed by pilots and airlines are basically “lifetime”. If the pilot voluntarily resigns, he must pay the company a huge compensation fee of millions of yuan.
  In order to help the civil aviation industry tide over the difficulties, relevant departments have issued a series of supporting policies. Since 2020, the Civil Aviation Administration of China has successively issued a “16+8” package of support policies in four aspects: finance, finance, industry, and freight. According to statistics, these policies have reduced the burden on airlines by about 10 billion yuan throughout the year.
  In February 2022, 14 departments including the National Development and Reform Commission jointly issued the “Several Policies on Promoting the Recovery and Development of Difficult Industries in the Service Industry”, in which, in addition to 10 inclusive relief support measures applicable to civil aviation enterprises, they are also tailored for the civil aviation industry. Five targeted policies have been formulated, including: suspending pre-payment of value-added tax by air transport enterprises for one year, supporting airlines and airports in epidemic prevention and control, subsidizing the civil aviation industry at all levels, and promoting the cancellation of aviation kerosene prices. Marine transportation insurance premiums, port fees and other expenses, encourage banking financial institutions to increase credit support for hub airports, etc.
  From a global perspective, the International Air Transport Association has given a more optimistic forecast: the global air passenger traffic will reach 83% of the pre-pandemic level in 2022, and will exceed the pre-pandemic level by 2024. But anticipation is one thing, reality is another. What is certain is that the global civil aviation industry will have a long road to get out of the current trough.