As dozens of aircraft arrive at long-term storage facilities across Arizona, California, New Mexico and Arkansas in the United States to be moth-balled in the dry heat of these desert regions, it is becoming increasingly clear that the COVID-19 pandemic has dealt a crippling blow to international aviation that might take years to heal.
Thousands of pilots are losing jobs as similar long-term parking lots for planes in Australia and the Gulf are filling up, and now Israel is opening a desert facility that can accommodate 500 aircraft.
With the rapid spread of coronavirus, ravaging most parts of the world, parking facilities at airports across the globe are now full and airlines are moving their aircraft to cheaper parking facilities in desert areas where these flying machines will be parked for months or even years together, with older aircraft sometimes not taking off ever again.
Cost-cutting is the mantra of the global aviation industry now as revenues have completely dried up and airlines are wondering when flying will again return to the pre-COVID-19 era.
Parking aircraft at busy airports is an expensive affair and airlines prefer the “parking lots” of the Nevada type, especially when they know these planes will not be flying again in the near future. After 9/11, a lot of planes landed in such arid desert regions to be grounded for years and coronavirus pandemic has now resulted in a deja vu.
Contagion spares none
European airlines like Ryanair are working on plans to ground more than 100 aircraft and US airlines like Delta, American Airlines and United Airlines are sending dozens of aircraft to the desert for long-term parking. Emirates, Iberia, Etihad, SAS and Lufthansa are grounding aircraft in large numbers and orders for new aircraft are also getting cancelled. Virgin Australia has gone bust and some of its planes are being held up by airport companies for recovery of dues.
Top guns of Indian aviation feel the situation would be similar in India with the resumption of air traffic after the lockdown providing little respite. The Centre for Asia Pacific Aviation (CAPA) estimates nearly 250 aircraft will go ‘out of use’ in India due to a slump in traffic as the COVID-19 scare refuses to die down.
It is estimated around 650 aircraft were in service before the coronavirus pandemic forced the ongoing lockdown and the current forecast is that only 400 of these may return to the skies even after the government allows normal flight operations. Lakhs of jobs will be at peril if the industry does not recover and among those losing employment will be thousands of pilots.
Airbus, Boeing in huge trouble
Besides airlines and airports, among the worst hit due to the pandemic will be European giant Airbus and Boeing of the US who have been dominating the civilian aircraft manufacturing business for decades.
Airbus is planning to cut production to around 600 aircraft in 2020 as compared to around 860 in 2019. The situation will be worse in 2021 with only 350 aircraft expected to be manufactured as orders are getting cancelled across the globe. The situation is no better with Boeing that has dropped its ambitious deal for a joint venture with Embraer, apart from slashing production targets and cutting jobs to stay afloat.
Airbus CEO Guillaume Faury has appealed to its employees to prepare for sacrifices as production is being slashed sharply and cash has to be conserved to prevent 10,000 jobs from imminent elimination. Both Airbus and Boeing are getting financial support from the government which might help them to tide over the coronavirus storm.
B737 Max blow before COVID-19
In the case of Boeing, the cup of woes was brimming even before the COVID-19 catastrophe as the B737 Max aircraft suffered grounding after two crashes that killed over 340 people. As regulators cracked whip, airlines started grounding B737 Max, including SpiceJet that accounted for a dozen aircraft that were taken off flying.
Southwest Airlines of the US grounded 34 of these planes while Air Canada, China Southern Airlines and American Airlines have grounded two dozen aircraft each. Several other carriers have also stopped flying B737 Max after the crashes. The number of B737 Max aircraft kept in long-term storage in various parts of the world is estimated at around 200.
Due to the Max crisis and the coronavirus impact, more than 15,000 jobs at Boeing are said to be in peril.
Grounding is expensive
Apart from massive revenue losses, airlines also suffer due to the cost of maintaining aircraft that are kept at long-term parking facilities such as the ones located in America’s desert areas like Nevada or Alice Springs in Australia.
These aircraft have to be put under preventive maintenance to save them from corrosion and other technical glitches arising due to disuse. It takes 50 to 75 hours of maintenance work to prepare these aircraft for safe-keeping and that includes wrapping its engines and even safeguarding tyres according to the specifications laid down by aircraft manufacturers.
Fuel tanks are usually filled with heavy oil to protect engine parts and all inlets and openings are sealed with a special type of latex. Even windows are covered and inspections are done on weekly, monthly and sometimes even daily basis as specified by manufacturers. Such maintenance could cost over $50,000 per year for each aircraft.
Desert regions are preferred for long-terming parking of aircraft due to the low moisture content in such areas. Low moisture means less corrosion, and these areas are usually not affected by cyclones or hurricanes as well. While preventive maintenance is done to ensure aircraft can fly when they are required back for service, some older planes are “cannibalised” and their components are used in other flying machines that are in service.
Leasing companies also bear the brunt
Airlines do not own all the aircraft they use and leasing is preferred across continents as scarce investment does not get bottled up in aircraft purchase. Firms like GECAS, Avalon, Aercap Holdings, Nordic Aviation Capital and Dubai Aerospace Enterprise are among leasing giants that own a large fleet of aircraft, with investments to the tune of billions of dollars.
The sale-and-leaseback model is popular in India and that leaves ownership of aircraft of leasing companies even as airlines like IndiGo and SpiceJet operate the aircraft. Due to the grounding of aircraft all over the world, leasing companies are flooded with requests for moratorium — with airlines seeking reduction in lease rent and payment holidays till flight operations are restored and cash is generated through sale of tickets. Over a period of time, lease rentals are bound to decline due to slack demand for aircraft and eagerness of leasing companies to find new customers for planes returned by existing customers.
Pilots out of cockpit like fish out of water
Increasing groundings, expected reduction in flight frequencies and financial pangs of the aviation industry are resulting in thousands of pilots losing jobs. Virgin Australia has alone grounded 600 pilots while Emirates wants all its pilots above the age of 56 to depart. Nearly a thousand pilots at Ryanair and over 500 at SAS are losing their jobs and Wizzair is said to be facing over 100 redundancies.
Besides loss of income, pilots also face challenges in keeping their licence updated if they do not fly and that makes finding alternate employment difficult.
In India, job losses among pilots is likely to begin with foreign nationals and then expand further with budget carrier SpiceJet saying it will pay only flying allowances for April and May. This is being seen as just the beginning of the pain that the aviation industry is going to face in the months and years of COVID-19 disruption.