DUBAI: Labour shortages and inflation are the two biggest issues that the aviation sector faces as it emerges from the COVID-19 pandemic, an analysis report by Oliver Wyman has revealed. 

According to the Airline Economic Analysis 2021-22, these challenges have made it difficult for airlines to satisfy growing demand and push up operational expenses. This annual report is aimed at providing the aviation industry with data and commentary to help it address evolving industry challenges. It looks at global and regional demand and capacity trends in major world markets.

“Airlines have been at the receiving end with the fuel price hikes and personnel shortage impacting their bottom line,” André Martins, Partner – Head of IMEA Transportation and Services at Oliver Wyman said. 

The key insights on the sector in the analysis report for the Middle East included the following:

1. Labour shortages are across the board, from pilots to baggage handlers, to ticket agents, to flight attendants, to aircraft mechanics.

2. The rise in the price of fuel is the main factor in rising costs.

3. The conflict in Ukraine has exacerbated existing stress on commodity markets and supply chains and meant flight restrictions due to the closures of airspace and sanctions. In January 2022, just before the conflict began, Middle East countries represented the second largest destination for air travellers from Russia, at 28% measured by scheduled seats (behind Europe with 42%). In the other direction, the UAE represented 9% of the share of international seats headed to Russia at the same point in time, second only to Turkey.

4. Compared to the spike in demand for leisure travel, business travel is recovering slowly.

5. Sustainable aviation is still way off, with battery-operated and hydrogen-propelled commercial airliners facing technological and regulatory hurdles, and sustainable aviation fuel is too expensive and too scarce to be a viable option. In fact, the aviation sector is likely to see an increase in emissions before they fall. Qatar Airways and Dubai Airports have both signed a pledge to work towards 10% sustainable aviation fuel by 2030, reflecting regional momentum.

6. Air cargo is a bright spot, driven by growth in e-commerce during the pandemic, and the shortage of truckers.

On a more positive note, Martins pointed out, “Every downturn in the global economy has proven to be the time for new market entrants in the airline industry. This time around, it has been no different – we have seen multiple airline start-ups just launch or prepare for an upcoming launch such as Akasa Air in India, the proposed new airline in Saudi Arabia, and Avelo in the US, among many others.”