BANDAR SRI BEGAWAN (Nov 13): Leaders of Asia-Pacific airlines laid their frustrations bare with the original equipment manufacturers (OEMs) for the supply chain constraints currently plaguing the industry at the Association of Asia Pacific Airlines' (AAPA) 68th Assembly of Presidents held on Wednesday.
A panel discussion, which was initially slated to explore lessons learned during the Covid-19 pandemic and the industry’s future, swiftly morphed into a discussion dominated by airlines’ qualms with the OEMs' failure to make timely delivery of new aircraft, as well as to provide quality maintenance, repair and overhaul (MRO) services.
“In my personal view, the pandemic's effect (on the industry) is not over yet. It’s still prevalent today and impacting all of us in this room — through the supply chain constraints, engine issues, fuel capital, financial stability, erratic fuel productivity, foreign exchange (fluctuations) and interest rates,” said Malaysian Aviation Group Bhd (MAG) group CEO Datuk Captain Izham Ismail, who was a panelist at the assembly.
The “dark clouds” still loom over the industry, he added.
Izham pointed out that demand for air travel is projected to exceed pre-Covid-19 levels this year. However, he notes that the rest of the aviation ecosystem — particularly the OEMs — are not reacting fast enough for the industry to capture it.
“I’ll be very candid, all OEMs want to do is make money from the airlines. We as an industry — the airlines here — what are we doing together as a family? Are we pushing our supply chain providers strong enough? Are we trying to curtail those who are trying to make money from us? I don’t think so.
“For us to ensure the industry prevails, remain profitable, goes from strength to strength, year by year, we have to understand the underlying issue in the post-Covid-19 era,” Izham lamented, adding that history will only repeat itself if the source of the problem is not resolved. "It will not be long before another black swan event arrives."
Besides delayed deliveries of new aircraft from US-based aircraft manufacturer Boeing and its European counterpart Airbus, Izham also questioned the quality of repair work conducted on rotables or serviceable parts.
“In the case of Malaysia, 60% of our rotables that we received (and) installed in the airplane, failed within two weeks,” he said. Malaysia Airlines Bhd was hit by technical setbacks in recent months, which led to a string of flight disruptions and the national carrier temporarily reducing its network up to the end of the year. The problem was compounded by aircraft delivery delays by Airbus and Boeing.
Another panelist Singapore Airlines Ltd chief executive officer (CEO) Goh Choon Phong echoed Izham's sentiments, saying it indicates an issue the industry is facing as a whole.
“We have to do our part to engage the OEMs, as well as other parties that are required as part of the ecosystem, to resolve this kind of issues,” he said.
Astana Airways CEO Peter Foster and Thai Airway International CEO Chai Eamsiri, who formed the remainder of the panel, also shared their frustrations with OEMs’ performance in recent years.
“The ‘supply chain’...these are two words all of us pretty much hear every day. It’s not something that is specific to OEMs in the aviation industry, it's something that we all live with in our day-to-day lives,” Foster said.
“So, the OEMs have to get their act together on this,” he added.
“Ladies and gentlemen, you do see four frustrated CEOs right? The conversation we had at breakfast was ‘tell me, which [airline] CEO goes home every day and is not frustrated’?" Izham quipped.
Nonetheless, Izham notes that the forecasts point towards a bright future for the aviation industry, with a compound annual growth rate of 5% to 6% over the next five to 10 years.
Still, whether or not the industry will achieve that growth is dependent on the its ability to shape up and weather the current headwinds at hand, he added.