Aircraft ground support equipment market hit hard as air travel operations come to halt due to COVID-19
By Vatsal Jain and Nikhil Kaitwade, Future Market Insights
VALLEY COTTAGE, N.Y. - Aircraft ground support equipment (GSE) are essential at airports – domestic or international - to help perform the airport operations such as refueling, and powering the aircrafts while they are landed, baggage handling, and moving passengers.
For destination airports, aircraft ground support equipment and supply considerations are vital pre-journey planning concerns, especially while operating to remote or domestic airports. Moreover, it is imperative for commercial aircraft operators to examine ground support equipment and service requirements at every international destination.
While most of the airlines have their own aircraft ground support equipment, in few cases, some airlines prefer leasing or renting their equipment with 3rd-party providers, and local ground handlers, at least two weeks prior to the day of operation. According to the International Air Transport Association (IATA), over half of the airline companies outsource the aircraft ground support equipment services to 3rd-party vendors or private non-airline companies.
However, the coronavirus (COVID-19) pandemic has pushed the aircraft ground support equipment market into a possible recession. The growth of the market is directly linked to the aviation industry, which was the first one to undergo complete shutdowns as it became the carrier of the coronavirus across borders, unknowingly.
The future of the aircraft ground support equipment market is closely connected to the swarms of employees getting furloughed. With no operations, the ground support equipment, including cargo loading machinery, kiosks, air start units, and refuelers have been rendered out of job.
Until the airports begin their activities, the outlook of the aircraft ground support equipment market will remain in darkness. Decline of operations at the terminals will have a far-reaching impact on the market. Companies running on contracts are banking on government-backed funds to relieve them as the aviation industry come to a halt.
Air Traffic Plunges amid Travel Restrictions
The global air traffic plummeted by 52.9% in March 2020, thanks to the COVID-19-induced travel restrictions. This massive drop in terms of total revenue per passenger kilometers (RPK) was the steepest decline in the recent history. About 290 airlines associated with the IATA have been badly hit by the drop in air travel demand with most of the countries in lockdown as governments fight to flatten the curve. Together, those airlines capture 82% of the global air traffic.
To further add worsen the situation, the global air traffic declined even more in April 2020 and majority of the signs indicate a steady recovery. February had already witnessed a 10.3% annual dip as China faced the worst of the pandemic. The Asia-Pacific (APAC) air traffic crashed by 65.5% in March 2020 with a 54.3% slump for European carriers and a 53.7% decline for the North American counterparts.
Although the COVID-19 crisis took some time to take hold in Africa, air traffic fell on the continent by 42.2% in March 2020 following a meager 1.1% dip in February 2020. Several airlines are in a free fall and have not hit the rock-bottom. As such, it is imperative for the governments to work with the aviation industry after the travel restrictions can be relaxed.
But Air Cargo Facilities are in Motion Somehow
Contrary to the drastic drop in passenger air traffic, air cargo operations are soaring to respond to the need for moving essential supplies to break the COVID pattern. Time is a factor, but cargo movements are restricted by the governments. In March 2020, global air cargo demand dropped by 15.8% as compared to March 2019.
On the demand side, there has been a rise in transportation of high-demand products, including, e-commerce purchases, pharmaceuticals, and medical equipment amidst the pandemic. Yet, on the supply side, the industry-wide global air cargo capacity waned more considerably at 24.6% yearly.
About 40% of the annual international air cargo is usually moved in the bellyhold of the passenger aircraft fleets - matching almost the same capacity - with the bulk portion grounded, at present. Nearly 20 airlines have committed to leverage their passenger fleets for dedicated cargo missions spanning across the globe, including Qatar Airways, Delta, and Cathay Pacific.
The need is crystal clear. Governments and industry have to cooperate to create a more flexible aviation ecosystem for cargo, which can serve as a model for passenger air travel once that get back on its feet. For the aviation industry to recover and the world to benefit from air operations, the approach has to be synergetic.
Tracing the Path Beyond
During the economic downfall of 2008-2009, the aviation industry was affected due to lack of discretionary spending to purchase air travel tickets. Soaring loans and rising unemployment smashed the industry in several ways a decade back. That said, the recovery of economy was not uncertain or scarred by fatal circumstances. A decade ahead, the global economy has collapsed, not just in a cyclical way, but also due to rising health concerns amidst the COVID-19 pandemic.
The impact of the pandemic on the aircraft ground support equipment market will be dire, leading to delayed recovery of the market. As ground handling services are usually outsourced, this could trigger loss of jobs and rents to the equipment lenders.
The most important aspect of sustaining the COVID-19 shockwaves would be to save the human cost. As ground equipment handlers have been furloughed indefinite, companies need to look after their needs in order to maintain the human resource after restarting of the operations. In addition, focus on IT readiness will also be vital for market players. Making aircraft ground support equipment as contactless as possible will be the next key priority of the airports.
Moving ahead, government involvement will also play an instrumental role in the aircraft ground support equipment market. The civil aviation industry is crucial for business, and tourism, which are integral parts of the global economic structure. Developing smart aircraft ground support equipment will be a game-changer for the market. Smooth automation will shape the way terminals operate in the futuristic aviation industry. Having that said, the cost it incurs on the human labor is yet to be explored.
Author Bio Nikhil Kaitwade, Research Manager at Future Market Insights:
Nikhil Kaitwade works as Research Manager at Future Market Insights. With over 8 years of experience in market research and consulting industry, Nikhil has worked on more than 250 research assignments pertaining to chemicals, materials, and energy sector. He has worked directly with about 35 reputed companies as lead consultant for plant expansion, product positioning, capacity factor analysis, new market/segment exploration, export market opportunity evaluation and sourcing strategies. The insights presented in this article are based on Future Market Insights COVID-19 Impact on Aircraft Ground Support Equipment Market.
Author Bio Vatsal Jain, Market Research Writer:
Vatsal is an experienced market research writer, who works closely with the Automotive and Transportation research team research team at Future Market Insights. With sound research skills and his own style of writing thought leadership articles, Vatsal extensively covers happenings in the aforementioned domains. The insights presented in this article are based on Future Market Insights COVID-19 Impact on Aircraft Ground Support Equipment Market.