The Resilience of the Airline Industry: A Post-Pandemic Recovery and the Role of the Non-Ferrous Metal Industry
Four years ago this week we were all shocked by the immediate shutting down of the world in support of "flattening the curve", on speaking to people this was a historic event where everyone remembers where they were on 3/16/2020 as we got the news of the lockdown. Little did we know those two weeks would continue for longer than expected and impact the entire globe over the coming years.
With this lockdown The COVID-19 pandemic brought unprecedented challenges to the airline industry, with revenues in 2020 totaling around 40% of the previous years. However, the aerospace and metals industries have shown remarkable resilience and adaptability, gradually recovering from the devastating impact of the pandemic.
A Shift in Travel Patterns
One of the most significant changes in the industry has been the shift in travel patterns. Business travel, which traditionally contributed significantly to airline revenues, has been slower to recover. It is estimated that it will only likely recover to around 80% of pre-pandemic levels by 2024. This is largely due to the rise of remote work and flexible working arrangements, which have led to fewer corporate trips
On the other hand, leisure travel has been fueling the recovery. In previous crises, leisure trips or visits to friends and relatives tended to rebound first. As the pandemic subsides, the rise in leisure trips is expected to outpace the recovery of business travel.
The Role of Digitalization
The pandemic has also accelerated the digital transformation of not only the travel experience but also metals suppliers need to accelerate digitization and automation in an industry heavily reliant on labor. Mobile apps are now being used to store travelers’ vaccine certificates and COVID-19 test results. However when was the last time you were asked for a proof of vaccine or negative test? This digitalization trend is expected to continue, transforming various aspects of the travel experience including touchless boarding and security using facial recognition technology.
The Path to Profitability
Despite the challenges, the airline industry, particularly in the United States, has adapted swiftly and smartly to constant and unrelenting pressure. The three US full-service carriers returned to profitability in 2022, collectively netting more than $2 billion for the full year.
The Impact and Support of the Non-Ferrous Metal Industry
The non-ferrous metal industry has played a crucial role in the recovery of the aviation industry. During the pandemic, the aviation and aerospace sectors faced significant hardships, with widespread repercussions felt from major aerospace corporations to smaller suppliers. Drastic production reductions and raw material shortages were the industry’s shared burdens due to the public health crisis. At TW Metals LLC our forward thinking vision and investment into key aerospace inventory, prior to pandemic recovery, allowed our customers to source material on short lead times where it was impossible elsewhere.
Roughly 25 per cent of global aluminum production is dedicated to the transportation sector, with a significant portion of this demand coming from aerospace manufacturers. At a more detailed level, aluminum is utilized in 80 per cent to 90 per cent of the components needed to produce an aircraft. This highlights the essential role that aluminum plays in the aerospace industry.
Since emerging from the pandemic, the demand for air travel has outstripped the industry’s ability to produce new aircraft, resulting in a considerable backlog of orders for new planes. Aerospace companies are now faced with the dual challenges of meeting this soaring demand while recovering from supply chain disruptions caused by the pandemic. They are also actively working with suppliers, including TW Metals, implementing measures to prevent such disruptions from occurring in the future. As the supply chain ramps up, know TW Metals are already prepared.
How did TW Metals react to support our customers?
TW Metals, like many companies in the metals industry, faced significant challenges due to the COVID-19 pandemic. The pandemic led to drastic measures, including scaling back production and even temporarily halting operations, to support the health of their employees and communities. This had a significant impact on productivity and profits.
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In response to these challenges, TW Metals took several strategic actions to adapt to the supply chain disruptions. They worked closely with operations to quickly segment all spending into what could be stopped, what could be stalled, what could be shrunk, and what must be sustained. We set up a control-tower methodology to review and challenge all of the spending segments and focus on medical and support industries in the Pandemic fight. This approach helped TW to mitigate supply-chain risks, protect cash, enhance productivity in operations, and make strategic choices that helped TW bounce back with a more resilient and competitive cost base.
Furthermore, TW Metals focused on identifying and mitigating vulnerabilities amid the complexity of their supplier-network, logistics, and products. Once such example was during 2020 TW Metals implemented an entirely new 3PL Transportation partner and strategy to support cost reduction and process improvement, this successful project increased on-time delivery and decreased damage of critically required products for the essential industries, including aerospace. We worked hard to support operations and maintain supply security, which was crucial in helping us navigate through the pandemic and continue to support the recovery of aircraft manufacturers.
Looking Ahead
The recovery of the airline and metals industry is a testament to its resilience and adaptability. While it was anticipated the sectors we expected to be smaller for years to come, this weeks news of Singapore airlines reporting two consecutive months revenues greater than 2019 tells another story. The industry has shown that it can adapt to new realities and continue to provide essential services to travelers worldwide.
As we move forward, it will be crucial for airlines to continue to adapt to these shifts and respond decisively to the long-term realities of a post-COVID-19 world. The future of the airline industry may look different, but it is undoubtedly filled with opportunities for growth and innovation
Now 4 years after the world locked down, we can look back and be proud of how TW Metals pivoted to support essential industries during the pandemic and how well we prepared for post-pandemic economic growth.
For more information on how TW Metals support aerospace visit https://www.twmetals.com/industries/aerospace.html
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