Global Trends

Regionalization

Globalization was a defining feature of the global economy since the early 1990s. However, the participation of imports in the global economy declined since the Great Financial Crisis due to increased protectionism and slower international cooperation. COVID is an accelerating force for this pre-existing trend. While many countries have been threatened by their high dependence on international supply chains, we believe that we will see several essential supply chains moving closer to their countries of origin. What inevitably will create new business flows and, consequently, new passenger flows. The regional market should be favoured, both in terms of leisure and business passengers.

Rightsizing

The faster airlines adapt to new demand conditions and market size, the better positioned they will be to establish themselves and take advantage of opportunities. This means reviewing previous fleet plans. There won’t be an intense growth cycle anytime soon. The industry will certainly recover, but conditions will be different.

The fragility imposed by the vast indebtedness will decrease airlines’ investment capacity. When made, these new aircraft investments will need to be closely aligned with the appropriate response to demand. Moon shots will not be awarded. E-Jets E2 are ideally suited to play this role.

Sustainability

Achieving zero carbon emissions carbon is a key objective for the aviation industry. Investment and research into new environmentally friendly technologies and sustainable fuels will continue at pace. Additionally, companies that comply with sustainability standards (ESG’s) will have an advantageous position in finding financing options and with the public opinion. This will create additional demand for more environmentally friendly technologies. As soon as the industry recovers, we will see significant substitution of old and less efficient aircraft by state-of-the-art ones, such as the E-Jets E2.

Passenger Behaviour

Our contact with technology increased during the pandemic by working from home. Consequently, a portion of corporate travel may be replaced by virtual interactions. On the other hand, the pandemic may also lead companies to move away from large urban centers since talent is not bound to a specific geography anymore. In any case, these changing patterns in business demand will be handled by airlines through increased connectivity, right-sized aircraft and improved revenue management.

Also, we expect that some of the current-generation leisure passengers will prefer shorter-haul trips. Their choices will reflect the realities of new travel procedures, their perception of personal safety while in transit, and the expected quality of experience at their destination. Airlines will need to be resilient and versatile to adapt to new patterns of passenger demand.

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