Impact of Covid 19 on Aerospace and Defence Sector

Coronavirus has had a detrimental impact on the global economy. With shutdowns and impending restrictions on business and trading activities, the economic structure has suffered a major setback. Among the sectors that have been affected the most by the impact of Covid 19 is the Aerospace and Defence sector.

Impact of Covid 19 on Aerospace and Defence Sector

Covid 19 has uniformly disrupted the revenue in the Aerospace and Defence sector. Following are some of the major impacts of Covid 19 on the Defence and Aerospace Sector-

Loss of Revenue

The biggest impact that Covid 19 has had on the Defence and Aerospace sector is the loss of revenue. Restrictions have been imposed on air travel. Intra-state, Interstate and International travel have come to a halt. This has led to a significant reduction in passenger traffic. With fewer passengers using commercial airlines to travel from one place to another, it has negatively impacted ticket sales leading to a loss of revenue for the aerospace companies and business organizations.

Cancellation of Production Orders

With Covid 19 at an upswing, production activities in the Defence and Aerospace Sector have come to a halt. The production scale has been halved to 50% of the original production scale. OEM’s, Airbus and Boeing are large aerial vehicles and require huge expenditure for ensuring the completion of the vehicle and redistribution in the market whereby it can be put to commercial usage. However, with lockdown and disruption in production facilities, such vehicles have not been produced in adequate quantity. Therefore a detrimental impact of Covid 19 on the Aerospace and Defence Sector is a disruption in production.

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Difficulty in Acquiring Production Ancillary Spare Parts

Transportation owing to the shutdowns have come to a halt. Thus the production centres for aerial vehicles have functioned remotely. They have been deprived of the resources necessary. Covid 19 has impacted the Aerospace and Defence sector by disrupting the logistical chain. It has been difficult to acquire the resources by transporting them from the point of production to the point of sale. Spare parts are necessary for repair and maintenance functions in aerial vehicles.

Disruption in Supply Chain

Another major Covid 19 impact on the Aerospace and Defence sector is a disruption in the supply chain. With an acute shortage of distribution and supply channels, the process has been hampered. Loss of adequate supply has also impacted the demand for aerospace and defence services. Loss of mobility in the transportation of resources has also impacted the aforementioned sector negatively.

Loss of Manpower in the Aviation Industry

Acute Job Loss has been one of the primary features of this Pandemic. Covid 19 has impacted the Aerospace and Defence sector by forcing people to take voluntary retrenchment. They have been forced to withdraw from working in the organization. This has led to large scale manpower loss in the aviation industry. The aerospace and defence sector has also suffered from a lack of competent personnel.

Planning a Recovery in the Aerospace and Defence Sector

Steps have been taken to mitigate the Covid 19 impact on the Aerospace and Defence Sector. Following are some of the major steps that have been taken towards the recovery of the Aerospace and Defence sector-

The expectation of Growth in FSA and NMA

Although the market has suffered immensely there is scope for recovery.

Opportunity persists that the downturn may increase airlines demand FSA (Future single-aisle) or NMA (New mid-market) and away from Wide Body. Covid 19 Impact on the Aerospace and Defence Sector is expected to flatten out with time. This will ensure a steady increase in the demand to the Pre-Pandemic level.

Growth in Passenger Travel

We expect passenger growth to recover the-COVID-1919 levels, similar to the 9-11 crisis, after which only a few could imagine that passenger growth would return to old strength. Covid 19 Impact on Aerospace and Defence sector has distributed production of Boeing Max 737. This aircraft was used for passenger travel on a large scale. Once the economy starts surging towards the Pre-Pandemic normal, it will be feasible to encourage air travel. Simultaneously the revenue for the large aviation companies would also increase.

Government Intervention

The Government will take steps to help the economy recover from the Covid 19 impact on the Aerospace and Defence Sector. A fiscal stimulus package would boost the production and demand variables in the aforementioned sectors. The financial stimulus will become available to safeguard system-relevant players. Thus responsive measures by the government would be beneficial in reducing the pressure on the companies in the aerospace and defence sector.

Summary

Therefore Covid 19 has impacted the Aerospace and Defence Sector, causing widespread disruption in its growth and development prospects. However, as the pandemic would recede, systematic application of funds and stimulus by the Government would help in making the sectors reach their pre-pandemic growth figures. Further modernization would also help the aerospace and defence sector to further set a course for more diversification.

Frequently Asked Questions (faqs)

How has loss of revenue been a negative Covid 19 impact on the aerospace and defence sector?

With passenger travel and ticket sales coming to a halt, the flight service companies have been unable to generate sufficient revenue.

What problem has been faced in acquiring resources for the aerospace and defence sector?

With the entire country in complete shutdown, transportation activities have been hampered. This has led to disruption in the process of acquiring resources for the aerospace and defence sector.

How can recovery be made to the FSA and NMA?

With the recovery picking up momentum, the NMA and FSA may get more important than the other forms of aviation vehicles. Therefore a shift in demand can take place.

What should the government do to revive the aerospace and defence sector?

The government should introduce a fiscal stimulus package to inject mobility into the aerospace and defence sector. It should look to introduce newer mechanisms to incorporate better utilization of financial resources.

Can passenger travel be revived after the Covid 19 Pandemic?

Passenger travel can be revived after the Covid 19 Pandemic by introducing better sanitization measures in the aircraft vehicles.

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