+ ON THE SOAPBOX: John Strickland - JLS Consulting

Seen as a senior commercial aviation guru John Strickland has held senior positions including network planning and revenue management with a number of airlines including British Caledonian, British Airways, KLMuk and Buzz.

John provides expert independent business and financial commentary on the sector for leading media, including the BBC, Sky, Bloomberg, CNN and the Financial Times.

A regular conference chair and moderator at industry events his expertise and analysis may well be called upon  on Friday morning.

Farnborough beckons.  The heady months of the summer peak approach and we will have a new UK Government on Friday.  It’s a perfect time to reflect on the state of the airline industry.

In my 40 plus years in the business I have never seen the coalescence of and sometimes contradictory factors at play as we see today.  These are shaping performance in ways both positive and negative

Firstly if we look at demand, it is in broad terms, incredibly strong.  Well-managed airlines have seen a return to reasonable levels of profitability.  

We are seeing a combination of high load factors and high yields when historically it has tended to be one or the other. Hold out for higher fares and see empty seats, push for high occupancy but accept fare cuts to achieve it.

On the one hand demand is strong, people are showing no let-up in the desire to travel and seemingly enough who are willing or at least able to pay higher fare levels.

On the other capacity is tight, partly due to supply chain difficulties which continue to impede manufacturers getting aircraft out of the door. In the case of Boeing, it is shocking to see the scale of challenges which it has to overcome to restore confidence and trust in its reputation.  That is only compounding delivery delays.

On the Airbus side we are witnessing the massive impact of inspection and repair requirements to Pratt & Whitney GTF-powered A321 aircraft.  Over 350 aircraft will be grounded over the coming year. Airlines wrestle to replace this capacity if indeed they can. These will be major talking points at this year’s Farnborough rather than large soundbite aircraft orders.

Aside from the significant demand and supply issues and as the industry continues to work urgently to address its sustainability challenge, it faces political polarisation.

In Europe, it is being weighed down by increasingly onerous regulation, be it consumer focussed, excessive limitations on needed consolidation due to perceived "competition" worries, or being horsewhipped to meet targets for sustainable aviation fuel (SAF) use with insufficient emphasis inadequate on delivering a partnership and investment framework between governments and the industry to help meet these targets.

Existing airport infrastructure is being capacity limited with night bans and slot restrictions (never mind new runway ambitions at Heathrow!).  There appears to be a loss of recognition of the essential catalytic value of aviation to society and economy.

By contrast, if we look at a number of other parts of the world, aviation is seen as implicitly and essentially a part of economic success in pushing ahead their 21st century development objectives. In the UAE, Emirates is ordering new planes, a new Dubai airport with at least three times the capacity of the present is being introduced within a few years.  

So too in Turkey, Saudi Arabia, India and China there is a real recognition of the economic and societal value of the industry to the benefit of their citizens improving living standards and affording the opportunity to travel.

As I look to the months and years ahead I see these real contrasts. Stretching the minds of industry leadership and requiring intense thought and reflection on how to square off some truly significant opportunities against equally important and unpredictable obstacles.  

It’s never been an industry for the faint hearted but never more so than in the coming years.  

John Strickland. 

http://www.jlsconsulting.co.uk

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READERS' COMMENT

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David Bentley, United Kingdom

Globally, things will change dramatically in the next few months for reasons that have nothing to do with aviation and everything to do with politics. In the UK we now have a government which does not recognise any benefit whatsoever in mass public air transport as you will see. Dubai World Central will not be fully open for 10 years.