Navigating Through Turbulence: The 2023 Aviation Market and trends for the new year
Just starting into 2024, we would like to take a moment to reflect on 2023, its challenges and trends for the new year and beyond.
The aviation industry has taken a bold step in 2023, shaking off the crisis mode and ascending into a commercial uptrend. Yet, as the industry climbs, it faces the headwinds of pervasive shortages, which threaten to destabilize its ascent.
Here, we unpack the complexities of today’s market and trends and look beyond the horizon.
The Prevailing Theme of Shortages
As the engines of commercial aviation roar back to life, the sector is confronted with a variety of shortages—materials, labor, and components. Supply chain challenges intensify as manufacturers and MROs strain under the growing demands, driving costs upwards and constraining productivity as well as profitability.
Yet, adaptive strategies are visible in the industry. Older aircraft remain active these days against traditional retirement timelines, not just out of necessity to meet passenger demand, but as a strategic option against delays in OEM production capabilities. Material access through alternative avenues like Used Serviceable Material (USM) emerge as permanent ways around constricted OEM supply lanes.
Adapting to Market Pressures
However, in the long run, we see aircraft retirements projected to surge by over 50% for the period from 2024-2033. With a fully embraced USM market, we expect to see price pressure on new material. The expected increase in material availability might redefine pricing dynamics for legacy fleet types, challenging the equilibrium of supply and demand, ultimately making purchase decisions more complex.
Trends Shaping the Future
- Talent Management and Technology
As companies navigate through rising demand and shifting workforce expectations, they’re turning to emerging technologies as both a solution and a stimulant.
By initiating programs that engage employees with advanced technologies, firms are not only enhancing profit margins but also motivate their workforce, preparing them for the complexities of tomorrow’s industry landscape.
- Digital Transformation
Generative AI is no longer just a buzzword; it’s a lever for growth and efficiency.
We expect to see new products that will connect supply and demand for the aftersales market in a more efficient way, leveraging the benefits of the material available in the marketplace.
In the digital age, cybersecurity is more important than ever. As digital interconnectivity expands, so does the surface for potential cyber threats. Protecting market transactions from ticket sales to material sales and purchases will be key to safeguard the industry`s future, ensuring that the skies remain not just open but secure.
- Sustainability
We will see more and more demand for sustainable solutions in the industry. A holistic approach beyond use of SAF, covering all aspects of the industry operations including a re-use of components, its repairs and related logistics.
All these initiatives together will pave the way to the net-zero industry target.
Despite the headwinds of shortages and inflation, the sector’s trajectory towards growth remains steadfast. The aviation industry, with its eye firmly on the horizon, continues to innovate, transform, and secure its operations. New technologies expected in the near future in material management can unlock further potential for efficient operations, supporting the industry to climb to the next flight level.