The sky is the limit: Perspectives on the emerging European commercial aircraft value chain recovery and beyond


Demand for European commercial aircraft is poised to recover. How should the industry respond?

While commercial aerospace was severely hit by a historic drop in air traffic during COVID-19, we are now seeing signs of demand recovery. As borders open and travel restrictions relax in most of Europe and other parts of the world, airlines are getting closer to their prepandemic flight schedules.

The restart of air operations and travel activities raises many questions in the European commercial aerospace industry: What are the air travel trends shaping the industry? What will the changes in air passenger behavior (for both business and leisure) entail, not only for major airlines but also for other aerospace players and their stakeholders? What are the near-term and long-term business risks and opportunities for individual industry players?

History has shown that following an economic crisis, aircraft construction eventually returns to its precrisis way of operating and sales figures. Given that the current economic crisis was precipitated by a public health crisis, might we see changes to the industry that persist long into the future?

These myriad open questions reveal the intense uncertainty associated with both what aircraft demand patterns will look like as COVID-19 restrictions relax and which trends OEMs, suppliers, and other companies in the industry’s value chain should be aware of to navigate the industry’s recovery and future landscape.

AAM consists of several pillars: urban air mobility (UAM), unmanned aerial systems (UAS, «drones»), UAS traffic management (UTM), and sustainable aviation. Together with the new supersonic aviation, it forms the future air mobility (FAM). AAM market value is expected to grow and could reach between $300 billion to $500 billion by 2040.

The main sources are (1) intra-urban mobility, such as airport transfers, inner-city commuting, touristic trips, and short business trips, (2) intra-urban mobility, such as visiting friends or family outside of the city, commuting from outskirts to the city center, and (3) logistics air transport, such as goods transportation and last-mile delivery.

As the sector’s prospects brighten and new major industry trends emerge, players might begin to think about the restructuring steps their organizations want to take and assess their readiness to ramp up. While a few organizations have already invested heavily in restructuring and preparing for the COVID-19 recovery and beyond, most are still at an early stage. At this critical inflection point, the sector’s players—regardless of whether they are OEMs or occupy some other link along the supply chain—can benefit from taking an honest diagnostic of their state of preparedness for the opportunities and challenges ahead.

Against this backdrop, this publication provides fresh insights from the latest McKinsey research (Text box 1) into how the COVID-19 recovery and emerging new market trends will impact the European commercial aerospace industry and discusses how European commercial aerospace players can start preparing for the future industry landscape.

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McKinsey & Company is an American worldwide management consulting firm, founded in 1926 by University of Chicago professor James O. McKinsey, that advises on strategic management to corporations, governments, and other organizations.

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Source: Valdai Discussion Club