By Graeme Davies
When times are tough, civil aviation is traditionally one of the most sensitive sectors as the numbers of people travelling dips along with business activity and a tightening in consumer spending.
But throughout the past two years, as the US economy has experienced a rather weak recovery and is now showing signs of stagnating again and the eurozone has plunged into a second recession, civil aviation has continued to boom and this should provide confidence for the many Welsh companies who are plugged into the civil aviation supply chain, particularly with US giant Boeing.
Indeed, the accepted rationale for BAE Systems to pursue a merger with European counterpart EADS is due to the desire on BAE’s part to get more exposure to the growth in civil aviation at a time when defence budgets, especially in Europe and the US are coming under increasing pressure.
And that growth in civil aviation is being fuelled from a new source, emerging markets demand. Growing populations, growing wealth and increased economic activity in the emerging markets is driving a boom in air travel, especially in Asia and Latin America and this has been translated into bulging order books for the major civil aviation suppliers.
Both Boeing and Airbus have recently launched new, more efficient airliners such as Boeing’s Dreamliner fleet in a bid to capture a share of this growing demand and even with the emergence of domestic rivals within the emerging markets, their dominance of the sector continues.
Indeed, Boeing recently predicted 34,000 passenger jets will be required in the next 20 years, worth $4.5bn. China will be the biggest market for all types of jet and Asia Pacific will account for more than a third of all deliveries.
Airbus, which is already present in Wales at Broughton, stole a march on Boeing with the launch of its new class of jets in the second half of the last decade. But its American rival is expected to begin winning back market share with the ramp up in production of its Dreamliner series of jets. At the Farnborough Air Show this summer, Boeing outsold Airbus with total orders worth $35.6bn for 373 aircraft compared with Airbus’ 115 aircraft worth $16.9bn.
The global boom in civil aviation can only benefit Welsh businesses, given the strength of the sector within Wales. Suppliers to companies such as Rolls Royce should benefit as the engine maker enjoys a boom in demand – Swansea’s TIMET is a key supplier of engine parts.
Meanwhile, precision engine parts maker Doncasters has also set up shop in Abergavenny, and other supply chain companies such as Contour Seating are in a good position to benefit from the aviation boom.
It should also provide a boost to the St Athan enterprise zone set up by the government to specialise in aviation services and already home to Iron Maiden singer Bruce Dickinson’s Cardiff Aviation aircraft repair and refurbishment business, which hopes to create 1,000 jobs within the next year. Overall, the Welsh government is aiming to create 10,000 jobs at St Athan by 2025.
This is a prime example of how Welsh companies, including the likes of GE Aviation, can benefit from the boom in aviation even if they are not selling directly to the new planes market – with the growth of aviation will come growth in the secondary market as new ventures in less wealthy countries and particularly in emerging regions such as Africa will turn to refurbished airliners to establish themselves. Indeed, one third of the UK’s repair and maintenance of airliners is carried out within 30 miles of Cardiff airport.
Finally, we should not forget the defence aviation industry which is well represented within Wales and here, too, Boeing plays a part. The Parc Aberporth technology park and airfield in West Wales has played host to trials of Boeing’s unmanned surveillance aircraft.