Finance Technology Leverage LLC

Escalated ambitions by global aviation to introduce new technology will overcome coronavirus travel restrictions

Jerry Flaxman

Escalated ambitions by global aviation to introduce new technology will overcome coronavirus travel restrictions

The Coronavirus pandemic of 2020 is a once-in-a-lifetime event that is threatening the global aviation industry. But it is a once-in-a-lifetime opportunity to introduce technology and change. Governments are ill-equipped to lead the fight back; it requires an industry-led response to overcome coronavirus travel restrictions.

Aviation: a vibrant industry now on its knees

Of the many industry sectors affected by the current coronavirus pandemic, aviation has been one of the hardest hit. Coronavirus travel restrictions imposed to limit the spread of Covid-19 have reduced passenger travel across the globe by up to 70%, resulting in an estimated revenue loss for 2020 of $1.52 trillion.

In a business that survives on the optimal density of passengers in aircraft, airlines find that they are unable to manage social distancing inside aircraft while maintaining pricing that will produce positive cash flows. The prospects for regeneration in the short term are poor; most leisure and business passengers will be reluctant to travel if airline operators cannot guarantee their safety and security.

Anti-virus compliance challenges start well before passengers board their aircraft. Most airports cannot properly implement social distancing measures for passengers. Terminals lack the space to allow a two-meter gap between each of the thousands of passengers as they pass through check-in desks, through security and onto transit buses. Heathrow Airport’s chief executive John Holland-Kaye has warned of kilometer-long queues to board each aircraft.

Current country-specific coronavirus travel restrictions make air travel an even less practical and attractive option. In some of those countries which allow any travel at all, the requirement to be quarantined for two weeks on arrival is likely to put off most travelers. It is made worse by the many countries that will not, or cannot, provide suitable accommodation for passengers during the quarantine period.

How aviation’s malady has infected aerospace

Behind the airlines, both in terms of the support it provides and the impact of the coronavirus, is the aerospace industry. The leaders of firms like Boeing and Airbus have already felt the dramatic and catastrophic impact of the coronavirus travel restrictions on their aircraft customers. They remember the slump in orders for new aircraft that was the result of the 2008 economic crash and realise that this will be many times worse. Behind the big brand aircraft final assemblers is a global supply chain of smaller companies who make systems from avionics and communications to passenger lifejackets.

Around 65.5m people are employed indirectly and directly by the aviation sector, including aerospace, and they all know that the phone will not ring with new orders until the danger is past.

The $2.7 trillion aerospace and aviation industry is under an existential threat. If a solution is not found quickly, then within a matter of months the industry and associated sectors, such as leisure, will suffer permanent damage. Some industry players are hoping for extensive government intervention in the form of loans or grants, but in a situation where public finances are under extreme pressure, as tax receipts drop and unemployment rises, many countries cannot provide such support.

coronavirus travel restrictions to be overcome by global aviation technology

Private companies and finance, not governments, will save aerospace and aviation

Set against the unlikelihood of external support, global aviation must learn to help itself. Covid-19’s impact presents huge challenges to the aerospace and aviation industries. They must firstly seize the opportunity to introduce new technology applications across the travel process. Rapid advances in consumer technology over the past decade have meant almost all passengers can receive and transmit information via mobile phone apps and these can enable compliance with coronavirus travel restrictions. So mobile track and trace apps can be deployed to travelers’ phones to keep them protected, in conjunction with a variety of health screening devices positioned at key points around airports.

Aerospace manufacturers are always seeking to innovate and airlines, which are mostly privately owned and financed, are motivated to onboard new technology if it improves safety, saves money or increases profit. Competition has honed these private companies’ instincts in understanding how technology can be rapidly deployed to maintain an edge over their rivals.

The same competitive instincts are not found in the public sector. Many airports around the world are state-owned and lack not only the innovation culture of the private sector, but also sufficient revenue to embrace the latest technology in use at some of the more profitable and successful airports. Only in the case of a government imperative, driving the adoption of specific security measures, as seen for terrorist screening since 9/11, have airports moved quickly to embrace new technology.

Arguably, Covid-19 is the new terrorist on the block. Governments worldwide must now work with the private sector to do all they can to manage the crisis. But this work needs coordination; there is little point applying measures piecemeal, leaving holes in the network with some countries left behind.

A coordinated response takes a non-state actor with a non-partisan perspective

Step forward the International Civil Aviation Organization (ICAO), a UN body that oversees international regulations and operating best practices, and which could almost have been conceived for this current emergency. ICAO has a unit called CAPSCA (Collaborative Arrangement for the Prevention of Public Health Events in Civil Aviation) and their NCLB (No Country Left Behind) initiative was set up to facilitate the adoption of best practice across all member states and provide guidance as to how the less able can achieve results with support from others with a vested interest. These niche skills and knowledge are vital right now.

“ICAO must quickly invite applications for assistance, identify potential tools for evaluation and secure investment to accelerate their commercial introduction.”

ICAO has already set up a Covid-19 Action Response Task Force 2020, with all 36 states of its governing council in support, and seems the obvious entity to lead aviation’s coronavirus fightback. With stakeholders including governments, technology firms and the investment community, ICAO must quickly invite applications for assistance, identify potential tools for evaluation and secure investment to accelerate their commercial introduction.

Global partnership for good and innovation

The scale of the Covid-19 pandemic defies comparison and calls for a public-private partnership in aviation on a scale exceeding anything attempted before. The usual reaction of “it will never happen” must be swept aside, just as other norms have been, making way for a new global paradigm in air transport co-operation.

ICAO and its partners must select and bring forward the technology initiatives that require accelerated deployment on a global network and financiers must step forward with open minds as to how to partner in a global accelerated innovation rescue initiative.

The pent-up consumer demand is strong, and the stimulus provided would generate new revenue and tax receipts and could streamline existing bottlenecks in air passenger processing. Delays and carbon footprint would be reduced, while global commercial and diplomatic relationships would flourish through community interaction and development.

ICAO is highly respected and has delivered on its mandate since 1947; 2020 is the year for it to step up to the plate. Its skills and influence can help resolve the biggest crisis of our time and save the airline industry from ruin. The work must begin now.

Jerry is Director of Global Business Development at Finance Technology Leverage (FTL). In financing exciting and challenging projects, FTL unlocks new advances in aerospace, energy, industrial technology and the life sciences. Contact us for more information.