Will 2002 see the aerospace industry rebound quickly from the economic slump which had begun to bite well before 11 September?
The answer is yes, provided that businesses, politicians and consumers can hold their nerve. The weeks following the terrorist attacks saw massive aerospace lay-offs as airlines axed services, put aircraft into storage and deferred orders. Manufacturers, principally in the USA, responded by slashing headcounts. A downturn rapidly became a crisis after 11 September as analysts predicted record airline losses and the Mojave desert quickly came to resemble a shopping centre car park.
However, some of this would have happened anyway and 11 September merely hastened what would have been a grinding consolidation and - to use the jargon - "right-sizing" in the airline market.
This is not to underplay the impact of that terrible day. Watching the horror of the events on television caused many members of the public for the first time to question whether they ever wanted to fly again. The sudden collapse in passenger numbers sparked a revenue crisis for airlines already heavily dependent on cash flow for survival. There have been a number of victims, the most high-profile of which have been Ansett, Sabena and Swissair. More will follow in 2002.
In the USA, the result is likely to be a reduction in the big six airlines to five or even four in the next 12 months. In Europe, the outcome is likely to be more dramatic. Swissair and Sabena's demise has made it politically easier for governments to cut the umbilical cord on struggling airlines and let the market do its worst. A number of carriers could go under.
Of course, it won't mean that more efficient airlines will be able to step in and take their place. But it will spur those parties still holding out against liberalisation to begin abolishing the rules that stop foreign airlines expanding overseas. The biggest concern will not be stopping certain airlines monopolising key routes, particularly on the north Atlantic, but ensuring that Europe has an efficient air transport network and that large cities are not left without connections. From 2002, the airline business in Europe will become increasingly dominated by alliances led by British Airways, Lufthansa and Air France, with entrepreneurial low-price players such as EasyJet and Ryanair nipping in as opportunities arise to soak up excess demand.
In the rest of the world, liberalisation may come slower, but ultimately taxpayers will grow weary of subsidising flabby national airlines and will be prepared to let new players, prepared to take risks, step in.
Despite depressing economic news from the USA, there are encouraging signs. The progress of the war in Afghanistan has created a feelgood factor in the USA that should begin to feed through to the market. Many nervous passengers will have made their first flight since 11 September over Thanksgiving or will do so at Christmas. Getting on an aircraft a second time will be easier.
Airlines which took out so much capacity after the attacks are now beginning to run aircraft fuller than they were before 11 September. Slowly increasing load factors could prompt a lifting of deferred orders, aircraft brought back into service and even new orders as the year goes on.
Boeing's decision not to axe the 717 is significant. Although its rationale is hardly a ringing endorsement of Boeing's belief in the prospects in that market, it is, at least, a bit of positive news. Boeing's continuing confidence in the Sonic Cruiser and that of rival Airbus in its A380 shows that, longer term, both expect airlines to go on investing in new aircraft.
In business aviation too, the mood is resilient, with aircraft makers determined to proceed with programmes. Last week's rescheduled National Business Aviation Association show in New Orleans may have been a more muted affair than normal, but it was a miracle it happened at all. The economic downturn in the USA, may have knocked some of the gloss off the millionaire's plaything end of the market, but corporations are increasingly looking at business jets as a cheaper, quicker and safer way of moving senior employees.
Next year's two big air shows - Asian Aerospace and Farnborough - will be the real barometers of market confidence. Despite the malaise in some Asian economies, manufacturers are eyeing China in particular as potential money-earners. Farnborough will be a chance to focus on the future rather than the depressing aftermath of 11 September. It could just be the launch pad a revitalised industry needs.
Source: Flight International