COVID-19 Impact on Aerospace Sector, and Aerospace Coatings Market
Aerospace sector is one of the major industries affected most in the current pandemic of the Covid-19 virus worldwide. The pandemic has led to the closed borders & transportation of passengers & goods simultaneously to avoid the spread of the virus, which ultimately caused the flights to be grounded and the high loss of revenues to the airlines. Even the civil airlines have reduced the seats offered (33-50%) to domestic passengers transport, but it will generate an average estimated potential loss of approx. 50-55% of the revenue for the year 2020. Domestic traffic has started recovery since mid-June 2020 in different countries, while the international traffic has seen some slower upward trend since July with a limited number of flights.
The above table shows the global civil aviation seat capacity, passengers & revenue estimates compared to baseline (business as usual, originally-planned) Source: International Civil Aviation Organization (ICAO)
There are no shortcuts to a quick recovery in the aerospace sector. It is anticipated that it would take at least 4-5 years to recover to the usual business in the pre-covid 19 scenarios. The pandemic has also impacted the global GDP growth rate and is likely to be negative. The pandemic has hit the manufacturers of aircraft, OEM, suppliers, etc. The aerospace industry is a low volume and high mix manufacturing industry where the supply chain includes various small & medium scale suppliers of various high-standard products, components, and services. For example, Boeing in India has over 200 suppliers that include Tata Advanced Systems Ltd., Tata Boeing Aerospace Limited (TBAL), TAL Manufacturing Solutions Ltd., Rossell Techsys, Bharat Forge, Hindustan Aeronautics Ltd. (HAL), ECIL, Cyient, etc. to deliver world-class quality and productivity. Due to the crisis, the airlines have started canceling orders of new aircraft. This has caused both Boeing and Airbus to reduce production by up to 50%. Many of the suppliers with small funding are struggling with weak financials, which may result in bankruptcy if the recovery gets late than expected. Airbus has delivered a total of 196 jets from January to June 2020, compared to 389 during the same period last year (production reduced 50.38%). However, Boeing delivered only 70 jets in six months in 2020 compared to 239 jets delivered for the first half of the year in 2019. i.e. production reduced to 29.29%.
Maintenance, Repair, and Operation (MRO) segment in the aerospace sector has also declined the demand of business activities. In this crisis, the airlines are mostly focused on cash management and sustaining long-term survival. One of the challenges with airlines is to manage aircraft into and out of parking and maintain the regulatory integrity for a longer time period at the optimum expenditure. Such a reduced demand scenario has caused a reduction of MRO spending by airlines at least 50% for commercial aircraft in 2020.
Before the covid-19 virus outburst, the aerospace coatings market had healthy market opportunities with new commercial fleets' order deliverable to be 44,040 by 2038. The year-on-year (y-o-y) growth rate in the last 5 years had an upward trend in the aerospace coatings market. The current pandemic scenario has slowed down the demand for aerospace coatings since the first quarter of 2020. The global aerospace coatings market is estimated to have a CAGR of 5.58% during the period 2020-25.
By region, North America is estimated to have the highest market share in 2020, followed by Europe and Asia-Pacific. The key players like PPG Industries, AkzoNobel, Mankiewicz, Sherwin Williams, etc., are focused on new product development and mainly on sustainable & environment-friendly products. These products would not only be better for the environment but also have standard quality coatings & lightweight for the aircraft.
For example, AkzoNobel chromate-free coating products like Aerodur HS 2121 provide vital benefits to exterior applications and other applications. It offers a sustainable solution along with improved adhesion, appearance, and layer thickness savings.
PPG provides different coating solutions for both exterior and interior applications. Aerocron e-coat chrome free primer by PPG can reduce waste by 80%, reduce weight by 60%, and improve material utilization to 95%. It is also corrosion and chemical resistant. Products like Z6160 and Z6148 peelable temporary protective coatings can be useful for the grounded aircraft to protect from environmental conditions in the current scenario.