Pandemic impact on aviation sector set to endure

Consultancy firm Cirium says that around 35% of the global aircraft fleet is still parked, and consultants at Oliver Wyman believe that by 2030 the global fleet will be 12% smaller than if growth had continued on its pre-pandemic trajectory.

The International Air Transportation Association (IATA) and major original equipment manufacturers (OEMs) such as Boeing, Airbus and Rolls Royce have revised their forecasts of when they expect pre-coronavirus levels of passenger travel and production levels to be reached. According to the IATA, the return to previous passenger numbers is now not expected until 2024 rather than 2023. Manufacturing will follow suit and although different aircraft platforms and tiers will be affected in different ways, the return to previous levels are not expected before 2023.

On the decarbonisation front, hydrogen is emerging as an important new clean fuel source for the aerospace industry, as well other sectors such as rail. There are calls now for the UK Government to increase its funding in line with the likes of France and Germany, to make sure that this strategically important industry, linked to defence and national security, survives and continues to thrive.

Spain has announced several measures to protect its aerospace and defence sectors, including an agreement with Airbus to invest €185m to boost its aerospace sector and minimise job cuts. The Aeronautical Technology Investment plan will be financed by the European Union and will run between 2020 and 2023.

Aerospace

Efforts are ongoing to build supersonic aircraft, with Virgin Galactic announcing its high-speed aircraft design. The firm has also signed a non-binding memorandum of understanding with Rolls-Royce to collaborate in designing and developing engine propulsion technology for high speed commercial aircraft.

Similarly, Boom Supersonic, an aerospace company building the world’s fastest civil aircraft, is working with Rolls-Royce to explore the use of Rolls-Royce’s propulsion system with Boom’s Overture supersonic passenger aircraft.

Meanwhile, SpaceX Crew Dragon’s splashdown signalled the return of human spaceflight. This has shown that a commercial collaboration with NASA can bring the price of space technology down drastically. The new Mars Rover, with UK-manufactured key components, is on its way to Mars. Plus the European Space Agency’s Solar Orbiter spacecraft, built in the UK, is in space travelling towards the sun, providing images never seen before.

Transport Secretary, Grant Shapps, has announced the start of a public consultation on the regulations for the UK’s spaceflight programme. The regulations to support the Space Industry Act 2018 will enable a range of commercial spaceflight and associated activities to take place in the UK.

Government and industry have set a target to grow the UK’s share of the global space market to 10% by 2030. The Government has already awarded grants totalling nearly £40m to establish commercial vertical and horizontal small satellite launch from UK spaceports.

A new National Space Innovation Programme has been launched by the UK Space Agency, with an initial £15m funding for innovative projects related to Earth observation, communications and international partnerships. Find out more and apply here

Advanced manufacturing

The Manufacturing Technologies Association has published a new report Decarbonisation: Future Growth for Manufacturing. It states that leading the world in green manufacturing could see the UK add between £8bn and £20bn to its economy and create an additional 400,000 to 1 million jobs. You can see the full report here

Defence

Trade body ADS says it believes the UK defence sector presents an opportunity to catalyse and contribute to economic recovery. The organisation says national strategic projects such as the Combat Air Strategy, shipbuilding and digital technologies must be considered as contributors to national recovery to sustain innovation, support the supply chain and create long-term high-value jobs.

British aerospace and defence equipment manufacturer Meggitt is currently building a new £130m site in Coventry. The company has secured a three-year $20m contract with US aerospace and defence giant Northrop Grumman for the supply of fuel bladders for aircraft.

Rail sector

European rail authorities have approved French high-speed rail maker Alstom’s purchase of Bombardier’s rail unit for around €7.5bn, giving the green light to the creation of the world’s second-largest train maker, behind China’s state-backed CRRC.

In order to complete the deal, Alstom will sell one of its factories in France, part of a Bombardier facility in Germany and a Bombardier commuter trains division. The EU’s approval comes just 18 months after Brussels blocked Alstom’s attempt to build a European rail champion with Siemens of Germany, arguing it could increase costs for signalling and next-generation high-speed trains.

Siemens has been awarded a three-year contract with Transport for Wales to renew and replace railway signalling lineside infrastructure and create a new integrated control centre as part of the Core Valley Lines (CVL) transformation programme.

The United Arab Emirate’s (UAE) Etihad Rail, the developer and operator of the Gulf country's rail network, has signed an agreement with China's CRRC (the world's largest supplier of rail transit equipment) to triple its fleet of wagons to more than 1,000. The UAE plans to have a rail network with 1,200 km (750 miles) of track, costing about $11bn. This will increase the transport capacity of the UAE's rail network by a factor of eight. Etihad Rail is 70% owned by the Abu Dhabi Government and 30% by the UAE Federal Government, and there are bound to be opportunities for the UK and the European rail industry in non-direct manufacturing areas, although these may be limited due to China’s involvement.

Manufacturing sector news

At the start of the month, the CIPS/IHS Markit UK Manufacturing Purchasing Manager’s Index for July was confirmed at 53.3 – an improvement on June’s 50.1, and a sign that the sector is returning to growth. At the same time, businesses positivity has now reached its highest level in more than two years.

Manufacturing businesses should be aware that, according to new government guidance, furloughed employees who are subsequently dismissed are entitled to statutory redundancy and notice pay based on their normal wages rather than the reduced rate via the Coronavirus Job Retention Scheme (JRS).

Details of HM Revenue & Customs’ ability to penalise businesses that make excessive JRS claims have also been published, while the CBI has issued a very useful JRS factsheet for employers.

Manufacturers are pushing for more information from the Government on the new UK Conformity Assessed (UKCA) standards regime, which is set to replace the European Union’s CE label following Brexit. It’s unclear whether the CE mark will continue to be recognised for a period in 2021 in the event of a no-deal departure – and businesses urgently need to know exactly how stringent the UKCA scheme will be.

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