By Stephen Keogh, Enterprise Ireland Trade Development Executive of Energy and Aerospace
The situation at hand
The Covid 19 pandemic has cost the aerospace industry dearly with losses of $47.7 billion predicted this year by the IATA. Facing this scenario, it is natural for the producers of aircraft to reassess everything from financial yield to production capacity. For airlines, management of cash takes precedent, and predictions when air travel will return to pre-pandemic levels remain ambiguous. In the United States, non-essential travel is picking up domestically, meaning international travel has yet to see the same increase. In fact, Oliver Wyman’s baseline prediction is that we will see global passenger level recovery in mid-2023. In the U.S., airline leaders have announced significant restorations of schedules for the summer of 2021. This may be good news from a glass-half-full perspective.
New aircraft orders are being reduced or postponed by airlines due to current low travel numbers. The decrease in overall flights has led to a lower number of aircraft requiring maintenance as airlines have resorted to cannibalizing existing fleets for parts or swapping out grounded aircraft. There is a growing emphasis on narrow-body aircraft as technical developments in the narrow body’s engines have enhanced their fuel efficiency and flight range. Lessors are growing their fleets in this direction and many airlines are retiring entire fleets of widebody planes in Europe and North America.
The speed of industry recovery is dependent on the production, procurement, and distribution of vaccines on a global scale. The White House is predicting the United States will be a lot closer to “normal” by July 4th. This should lead to a stronger appetite for travel in the last quarter of the year but COVID’s knock-on effects will be evident for a few years to come. This all being said, there are still opportunities to do business in the United States aerospace sector for companies that are flexible, innovative, or simply leading edge.
Ireland’s aerospace industry is ready to help U.S. partners get back to full strength
Supply chains of airframers and Tier One companies have tightened up as they are still burning down excess inventory, causing the demand for new orders to the industry to be delayed or at low levels in 2021. Two pieces of good news are that this should ease in 2022 and that this represents an opportunity for competitive Irish companies to displace higher-priced and/or underperforming incumbents, especially in the U.S. market although it will be a matter of timing, having the right certifications and making the relevant connections within procurement teams. Aerospace manufacturers have become wary of tying themselves into long-term fixed contracts with suppliers and are looking for their suppliers to become partners that are willing to share the risk. Quality, short production times, and speed of delivery will be required to beat out the competition.
The Emerald Aerospace Group (“EAG”) has a distinct advantage in this scenario. EAG is having success with this displacement strategy and is looking to press hard this year for big gains next year. The Irish group consists of ten companies with distinct capabilities in fabrication, composites, plastics, and component manufacturing. Through their diverse yet complementary range of skills, expertise, and capabilities the Group has combined their considerable resources to achieve sometimes impossible solutions for clients. Furthermore, the Group has vast experience in supplying components into the aerospace industry. With the ability to offer industry-leading production times and a competitive price structure, the Group is ready to help U.S. aerospace manufacturers on the road to recovery.
Innovation centers are another opportunity for companies looking at US aerospace. Traditionally the spend on innovation is quite low, but we have seen an increased demand for low-risk digital innovations that are more likely to provide an ROI and help reduce costs. It’s no secret that COVID has sped up digital adoption. Areas such as staff training, component tracking, and repair and maintenance can be greatly assisted by the adoption of Irish digital technologies that are changing the way major United States organizations do business. Irish digital companies such as ASD (Aerospace Software Developments), VRAI, and Antikytera are leading the way on this front.
ASD offers RFID tracking solutions to the world’s major airlines, turning the traditionally slow and cumbersome process of manually tracking items, such as life jackets on a plane, into a task that can be done in a matter of seconds. ASD’s solution also provides an automated, historical record of each manufactured item. They provide consultancy services to Airlines, MROs, and inventory component suppliers in the aviation market sector who require design expertise or specialist software applications.
VRAI is a Dublin-based company that has carved out a niche with its unique virtual reality training solutions. Training in a virtual world reduces the risk for employees, enhances operations, and saves time whilst reducing the budget needed for traveling and planning. This type of solution is especially relevant now as many staff can’t travel on-site to complete training. Their solutions are fully customizable and their latest project with the Royal Air Force is a testament to the value they can bring to the aerospace sector.
Antikytera is alleviating the inability to travel as easily as we once did pre-COVID. Helping the experts and technicians that would traditionally be on-site but can no longer do so. Antikytera Ermes solutions offer field technicians, now stuck at home or in the office, the opportunity to have calls with experts and allows for the live importation of annotations and 3D models, meaning that offsite experts can walk a layman through a process saving time and money on travel. While the technology is being adopted across industries, there is a huge opportunity for MRO technicians to capitalize on this unique low effort digital solution.
Necessity is the mother of invention and competition increases efficiency. For the aerospace sector if any positives are to come out of Covid it will be that there is an accelerated adoption of digital solutions and a more flexible and resilient supply chain. Those companies that chose to partner with Irish firms are gaining a distinct competitive advantage and setting themselves up to get back flying on all fronts, pun intended.