UK aviation organizations are encouraging the UK government to consider an aircraft scrappage stimulus scheme to help boost the struggling sector while helping facilitate the industry's move toward the goal of achieving net-zero emissions in 2050.
Roland Berger partner Robert Thomson detailed the Aircraft FIRSt proposal during an FIA Connect 2020 webinar, saying a study on the scheme suggests that it could help the sector if some of the key issues get resolved.
The plan aims to incentivize UK airlines to replace aging aircraft—those 25 years or older—with new, more efficient aircraft. The Roland Berger report, conducted with the support of a number of major aerospace companies, estimated that such an incentive would create a demand for 90 new aircraft with the associated retirement of 90 aircraft. Such turnover could reduce CO2 emissions by some 4 percent, Thomson said.
He cautioned that while that amounts to a “moderate” environmental benefit, the primary value would lie with economics. In addition, the proposal alone will not erase the sector’s financial woes, but it would help provide much-needed support.
The report illustrates the depths of the downturn, noting that aircraft deliveries likely will drop by half through 2020, while and maintenance, repair, and overhaul spending falls by 70 percent. At its low point, traffic in the UK alone plummeted 90 percent.
In the UK, aerospace remains a critical sector, the report highlights, noting that the industry contributes £34 billion ($43 billion) to the UK annually, supporting 114,000 jobs.
“Aviation and thus aerospace have both been crippled by the ongoing Covid-19 crisis,” the report said, adding, “A government stimulus is thus vital to help the industry mitigate the effects of the current downturn and secure one of the few remaining bastions of UK high-tech manufacturing.”
Under the scheme, aircraft more than 25 years old would be scrapped. However, stakeholders would need to address a number of issues to ensure such a scheme would work.
They include not only economic incentives for purchase but compensation for affected companies such as suppliers and MRO providers that operate under business models the premature retirement of aircraft would harm. Further, the scheme should be tailored to ensure that airlines that have already invested in newer aircraft don't suffer a disadvantage.
Furthermore, the scheme would need to be harmonized with other jurisdictions to ensure trade fairness. But Thomson noted that other countries have provided various forms of assistance to the industry. Any such scheme should ensure the investments aid the UK industry through parts content of new aircraft and through job support.
When asked about the scheme, Rachael Everard, head of sustainability for Rolls-Royce and a panelist during Wednesday’s session, said her company saw potential in the scheme but wanted to further explore the ramifications on MRO and to ensure funding remained available for further green research.