Boeing’s CEO, David Calhoun, has discussed the future of the airline industry today. In a conversation with FOX News, he outlined his predictions for a return to growth. While he doesn’t expect to see true growth returning for around five years, he believes that his company can do what is needed to ensure a healthy future.
Five years for growth to return
CEO of planemaker Boeing, David Calhoun, spoke today about his vision of the future aviation industry. He told Fox News that he predicted it would take years for the industry to return to what it was pre-pandemic, pitching a five year period to return to a state of growth. He told the publication,
“With respect to the longer term and the need for aeroplanes, we have chosen a course that, for three years we will slowly crawl back to the traffic levels that we had in 2019, and then it will take another two years to get back on the growth curve which of course the industry has enjoyed for almost two straight decades.”
The world’s airlines have taken a severe hit as a result of the coronavirus crisis. As borders close and demand slumps, airlines have grounded the majority of their fleets. That’s resulted in some canceled orders for Boeing, and predictions that the growth of the industry, and demand for new planes, will be somewhat stunted going forward.
How does the short-term future look?
A five-year timeline is a pretty awkward situation for airlines to contemplate. However, most will be considering the rest of this year, and how things look in the short-term future. Calhoun says he believes that the fate of the airlines rests in the hands of the passengers, and how they feel about flying. He said,
“If I survey all of our customers … and of course we do … most are trying to dial in a return of about 30 to 50 percent by the end of this year. A lot’s going to depend on how the public responds to the safety of airline cabins, etc. I think they are reasonably confident they can begin to approach sort of half the schedule they had before.
An increase in capacity to 50% of previous levels would be a marked improvement from where we are now. Already, we’re seeing signs of airlines putting in place measures such as mask wearing, inflight service reductions and temperature screenings in a bid to inspire confidence in their passengers. Whether these are enough to stabilize the industry remains to be seen.
Is five years a fair assessment?
It seems Boeing is erring on the side of caution with this five-year prediction. Across the industry, the general consensus is that it will take at least three years for demand to return to previous levels. Of course, for the planemaker, there is an additional lead time for things to get ‘back to normal,’ as airlines will need to see a steady year or two of growth before they’re in a position to invest.
However, there is one thing that could change predictions rapidly. Calhoun explained,
“The one wildcard, of course, is if a vaccine is developed and widely distributed sometime between now and then everything might change and it might come back at a much more robust way. But no one can predict that and it would be foolish for us to predict that, so this is the course we believe that is right to plan for.”
Indeed, the prompt development of a vaccine could change everything. But, in the short term, at least, the Boeing CEO has erred on the side of caution, undoubtedly a wise decision.