Finding new solutions to supply chain and talent challenges are among the key priorities for the airline and aviation industry to address fresh reports from consultants McKinsey highlight.
Talent acquisition, development and retention is one of the most important tasks for any company, and the industry has faced concern about the lack of qualified professionals. Employee churn in the US aloine is estimated to cost companies more than $5 billion per year, says senior McKinsey partner Brooke Weddle.
“It is a rate-limiter to performance and a critical factor to get right,” she says.
The current problems stem from the Covid crisis-driven early and accelerated retirements at the beginning of this decade. Companies must now manage an influx of younger workers while managing the outflow of older workers. “The very tight labour market is compounded by this grey to green transition.”
Knowledge transfer to this new generation, and giving those younger workers a perspective while filling the knowledge gap has increased urgency across the aerospace value chain.
“The wake-up call was already there,” Weddle says. ”I don’t think anyone has figured it out how to do it well.”
Many companies try to differentiate themselves by offering higher compensation, but Weddle says that could be shortsighted, and there are many more levers which firms could use in order to attract talent.
“We find companies lead with compensation, spend a lot of money trying to outbid each other, and that’s a hard game to play well,” she says. “They don’t spend as much time investing in middle managers, [for example] connecting meaning to work, or how to create flexibility.”
On the supply chain front, a McKinsey survey conducted in April 2024 showed that industry suppliers are unsure about what they need to invest in to prepare for future aviation technology requirements.
A majority of respondents to the company’s “Airspace and Defense Value Chain Survey” say that the next generation single-aisle aircraft, which could enter service as early as 2030, will have “evolutionary and not revolutionary” technology, says McKinsey partner Henry Marcil.
About 60% of those surveyed say the airframe will have a conventional tube and wing design with either modest or extensive use of composites, while 55% of respondents think the powerplant will be a conventional turbofan with similar or slightly better fuel burn advantages over today’s engines.
Hybrid and electric propulsion systems in addition to possible new aircraft designs, while currently niche and specialised, will force a broader swath of suppliers to be creative and innovative – but almost two thirds of respondents in the survey say they don’t know what kind of parts will be needed, or what they need to invest in to ramp up for that, he adds.
There is also a lack of consensus across segments on technologies most in need of further development, the survey shows.
“Navigating these turbulent times will require a mix of short term crisis control and long-term vision,” the consultancy says.
