Impactof COVID-19 on Aircraft Seat Actuation System Market in Automotive Industry
The COVID-19pandemic has influenced the whole planet with its major impacts on the economyand businesses across the globe. The COVID-19 spread worldwide in unprecedentedways due to its high infectious and contagious nature and lack of availabilityof its vaccine. As a result, the greatest medical challenge in the 21st centuryis yet to be faced by physicians worldwide. Though the emergence of the viruscan be traced back to Asia, many European countries along with the U.S. havebeen struck massively by the pandemic. The virus has spread across all regionsranging from North America, Europe, Asia-Pacific, Middle East, and Africa up toSouth America. The COVID-19 has been declared as a pandemic by World HealthOrganization (WHO) due to its increased spread across the globe. After thedeclaration of the pandemic, various countries announced the complete lockdownsuch as India, China, and other Asian countries to decrease its spread.According to the situation report of 7th June, 2021 by WHO stated 174 millioncases of the corona have been reported globally and 3.7 million patients aredead due to the coronavirus. On a slightly positive note, a total of 157million people have recovered and total of 1.9 million vaccine doses have beenadministered as well.
Actuators convertelectrical signals to mechanical movements. Seat actuation system inaircrafts enables passengers to adjust their seating position as per theircomfort level. Seats are powered and adjustable between various seatingpositions depending upon passenger’s requirement. Aircraft seat actuationsystems also allow passengers to adjust environmental conditions around theirseat such as lighting and temperature, watch movies and adjust their head andfoot rest.
The COVID-19pandemic has affected the aircraft seat actuation system market significantly.The persistence of COVID-19 has affected theaviation sector and hence disrupted the travelling and movement facilitieswhich were previously available for citizens of any economy.
STRATEGIC DECISIONSBY MANUFACTURERS OF AIRCRACT SEAT ACTUATION SYSTEM
The financialcondition and results of operations have been adversely affected by seatactuator manufacturing companies. This pandemic had forced the governmentsaround the world to implement stringent measures to help control the spread ofthe virus. As a result, global demand for travel had declined in the year 2020at a rapid pace and has remained depressed since then. This impact of COVID-19had continued to evolve and the shape and speed of recovery for the commercialaerospace still many industry’s growth remains uncertain. Few challenges havebeen faced by manufacturers of aviation companies. Such as,
· Partial or full closure of offices or manufacturing facilities, eithervoluntarily or in response to government had affected the production line.
· Lower production capacity and labor productivity due to employeeillness, loss of key personnel, inability to travel, or the implementation ofgovernment mandated or voluntary preventative measures such as reductions inoperating hours.
· Liquidity challenges including an inability to pay suppliers andvendors.
All theseunfavorable situations had affected the global economic and capital marketconditions of seat actuator manufacturing companies, which further forced themanufacturers to take few measures in order to reduce the impact of thisvolatility through diversification of markets and expansion. With this, fewseat actuator manufactures had pursued business opportunities from othermarkets, taking advantage of its technical design expertise and manufacturing capabilities.
For instance,
AstronicsCorporation had reported significant concentration of business with their twomajor customers; Panasonic Avionics Corporation (“Panasonic”) and The BoeingCompany (“Boeing”). Sales to Panasonic accounted for 11.1% of sales in 2020,13.0% of sales in 2019, and 14.4% of sales in 2018. Also the companyreported that the loss of Boeing or Panasonic as major customers may havesignificant reduction in business with either of those customers would reduceour sales and earnings. In 2020, they had a concentration of sales to Boeingand Panasonic representing approximately 9.5% and 11.1% of our sales,respectively. The loss of either of these customers or a significant reductionin business would significantly reduce the sales and overall earnings of thecompany.
In addition, thecommercial airline industry is highly cyclical and sensitive to such things asfuel price increases, labor disputes, global economic conditions, availabilityof capital to fund new aircraft purchases and upgrades of existing aircraft andpassenger demand, all of which have been significantly impacted by the ongoingCOVID-19 pandemic. A change in any of these factors could result in a furtherreduction in the amount of air travel and the ability of airlines to invest innew seat actuating system in aircraft or to upgrade existing aircraft. Thesefactors would reduce orders for new aircraft and hence, spending for cabinupgrades for which the manufacturing companies’ supplies their products,thereby reducing the overall sales of the companies.
IMPACT ON THE DEMANDAND SUPPLY OF AIRCRAFT SEAT ACTUATION SYSTEM
When the pandemicemerged, all the sectors including the aviation sector have been adverselyaffected due to government restrictions for travelling and movement.
The commercialaerospace industry, in particular, has been significantly disrupted, bothdomestically and internationally. The aviation industry has the huge growthpotential to help the country’s economic growth but due to lockdown imposition,the companies’ manufacturing of aircraft parts had been adversely affectedowing to less number of order received and severe financial crisis. Thesefactors are responsible for slowing down of the production facilitiespermanently. During this unprecedented time, various companies are experiencingdisruption in production capacities due to movement of labor to their nativevillages, non-travelling of passengers, and customers defer delivery of newaircraft. This has overall, reduced the demand of aircraft seat actuationsystem significantly. The impact of the COVID-19 crisis distanced more than 1billion passengers in the year, 2020 as compared to the projected baselinerepresenting a decline of around 64.6% of total global passenger traffic.
As Alexandre de Juniac,IATA’s Director General and CEO said, ‘’Last year was a catastrophe. There isno other way to describe it. What recovery there was over the Northernhemisphere summer season stalled in autumn and the situation turneddramatically worse over the year-end holiday season, as more severe travelrestrictions were imposed in the face of new outbreaks and new strains ofCOVID-19”
Aircraft seatactuation systems provide comfortable seating for the passengers in commercialas well as private aircraft. But as the COVID-19 pandemic continues, demand forspare parts is also down because of low maintenance requirement level. Whileproduction may slow for the same reasons as in aircraft manufacturing, demandover the next two years is unlikely to be affected since few manufactures arefacing severe financial crisis. Additionally, supply of aircraft pneumatic seatactuation system parts such as electronic components, position sensors, andarresting brakes have been depressed due to the ongoing pandemic.
For instance,
According to theEuropean Aviation Safety Agency (EASA) and Federal Aviation Administration(FAA) regulations, commercial aircraft with 9G seats will no longer bepermitted to operate in the next few years. The board had framed theseregulations on the requirement for aircraft to have stronger seats, which mustbe designed to increase the survivability of passengers and flight attendantsduring accidents. These had also posed a challenge for airlines in terms ofcost and time as many of them do not have the budget to replace seats of allolder aircraft with new ones.
CONCLUSION
Pandemic has takena toll on every aspect of life, including the global economy. With thesignificant downfalls in many sectors, a collaborative effort of government,industry players, and consumers can win the fight against COVID-19.
While most of thecompanies have shown resilience by innovating technologies in real time, anddemonstrating the tremendous value of the manufacturing network to customersand partners around the world, by partnering & collaborating together, seatactuator manufacturers are developing technologies and capabilities eitherinternally or through acquisition to provide innovative solutions to theaerospace, defense and other markets where their technology can be beneficialeven in this unprecedented time. This would create opportunities for thecompanies to deploy capital growth in the business and thereby surviving &wining in the market place in these uncertain times.
The COVID-19pandemic has changed the entire business scenario of aviation sector. Thecommercial airline industry has been severely affected by factors such astravelling restrictions, fuel price increases, labor disputes, global economicconditions, availability of capital to fund new aircraft purchases and upgradesof existing aircraft and passenger demand.
