Aerospace and defense industries around the world have yet to fully absorb the ongoing impact of the Covid pandemic, as continued twists and turns in the global public health crisis make forecasting a precarious activity. But that hasn’t deterred international trade associations converging on the Singapore Airshow to promote their member companies and what their nations have to offer by way of export potential, partnerships, and inward investment opportunities.
Last month, the UK’s ADS industry trade association reported that aerospace manufacturing remained weak as 2021 closed, mainly due to continued uncertainty in the air transport sector caused by the outbreak of the Omicron variant. The organization, which represents aerospace, defense, security, and space companies, said that the manufacturing output has continued to decline at marginal rates, despite some improvement since the summer of 2021. As of the end of November, it remained 36.1 percent below its output in February 2020, just before health officials declared Covid a pandemic.
“It’s certainly premature to say that an overall recovery from Covid is underway,” CEO Kevin Craven told AIN. “The industry is recovering in some areas but it’s slow, and we think it will be challenging to get back to 2019 figures much before 2023 or 2024.”
For instance, even though order activity for single-aisle airliners appears to have heightened compared with six months ago, sales remain around 40 percent down on 2019 levels. The situation for widebody aircraft is worse, at around 55 percent below par.
Beyond the order books, aerospace companies continue to struggle with supply chain blockages and skills shortages that Covid has exacerbated, with associated costs rising at the same time as the supply and demand curve steepens. “So there’s a capacity issue too, and the ability of the supply chain to accelerate production rates to respond to an uptick in demand is limited for now,” Craven added while insisting that overall he remains optimistic about prospects for this year and beyond.
Government support is more than usually critical under the circumstances, as many ADS member companies eagerly await confirmation of how much funding will become available through the next round of investment channeled through the Aerospace Technology Institute (ATI). Much of the effort concentrates on endeavors to help British companies to exploit the opportunities associated with the UK government’s declared objective of achieving net-zero emissions for aviation by 2050. In April 2021, the ATI suspended new funding rounds, indicating the government’s promised but delayed publication of an update to its FlyZero strategy would specify new amounts.
On January 27, ATI published a new report on zero-carbon aircraft technologies to make the case for further investments and a higher development priority for UK companies to demonstrate leadership in pursuit of the country's FlyZero commitment. This included a proposal for a hydrogen-powered 75-seat regional airliner, but made no mention of possible new government funding to support this and other work.
“The transition to sustainable aviation is a key issue for the industry and an important part of the Covid recovery,” Craven explained. “We’re working closely with the [UK] Jet Zero Council to further this agenda and we’re very pleased with the collaborative nature of the initiatives. As long as it is still funded [through ATI] there is a great opportunity here. Society will want to continue to fly so we have to provide the means for people to do this sustainably, and if we don’t there could be societal challenges around acceptance [of air transport].”
With political pressure on public spending in the wake of Covid, ADS still feels it can count on its government to honor defense spending projections made last year, backed by Treasury commitments running through 2031. But, again, the industry body is still awaiting final confirmation in the coming months on the granular detail of government military spending.
Regardless of any ongoing uncertainties back in London, ADS is here in Singapore jointly exhibiting with 13 member companies looking to promote the UK’s long-established aerospace brand. Despite uncertainties brought about by the country’s Brexit departure from the European Union, with the associated dislocation from EASA’s aviation safety governance and import/export complexities, ADS still feels there is a compelling case for inward investment in the aerospace sector, as exemplified by the U.S.-based Spirit AeroSystems group’s recent acquisition of the former Bombardier factory in Belfast, Northern Ireland, where it makes wings for the aircraft that is now being delivered as the Airbus A220 (formerly Bombardier's CSeries).
Overall, UK state financial support for its aerospace sector has proved meager compared with that of rivals such as France and the U.S., being measured in hundreds of millions rather than billions. Total amounts announced in 2020 and 2021 came to around £490 million ($660 million). By comparison, the French government, in response mainly to the Covid crisis, has pledged closer to $17 billion. Last September, the Biden Administration committed $482 million in new funding for U.S. aircraft manufacturers, on top of many more millions provided through channels such as NASA.
Thirteen UK companies, including BAE Systems and ejection seat specialist Martin Baker, occupy the ADS exhibit area at the Singapore Airshow. Both the U.S. Aerospace Industries Association (AIA) and France’s GIFAS aerospace group also committed to a significant presence at the industry gathering.