Canada’s Aerospace Industry: Poised for Liftoff
- April 29, 2021
by Noelle Stapinsky
Opportunities abound, but a national strategy and support are paramount if our aerospace industry is to recover from the pandemic and become a global player again
Before the pandemic, Canada’s aerospace industry was experiencing a period of growth with a positive outlook for 2020. However, more than a year has passed and entire fleets of planes remain grounded. Travel is at an all time low, borders remain restricted and there is a lack of a cohesive strategy for dealing with vaccinated or non-vaccinated travellers. Even within Canada, the regulations differ from province to province. But if planes aren’t in the air, this means there’s no revenue coming in, any kind of maintenance, repair and overhaul (MRO) is on hold, and OEMs are at a standstill in terms of regular production.
The Aerospace Industries Association of Canada (AIAC) recently hosted THRUST, a weeklong virtual conference that brought industry leaders and government officials together in a series of high profile discussions in March. A “super session panel” entitled It takes an Ecosystem to be Successful: Ours Needs Government Partnership, industry leaders discussed current struggles, highlighted how interconnected the industry is and what is needed to move forward.
Moderated by Mike Mueller, AIAC’s interim president and CEO, he kicked off the panel discussion by stating Canada’s aerospace industry is seeing a 40 per cent decline in revenues on the manufacturing side. “There have been significant layoffs in all regions of the country. And there have been some real challenges, especially on the civil side of the business.”
Daniel-Robert Gooch, president of the Canadian Airport Council, said traffic is at 14 per cent of pre-COVID levels. “In financial terms, nationally, our airports are expected to see losses of $5.5 billion in 2020/2021, and an additional 2.8 billion in debt by the end of the 2021. It’s that additional debt that really concerns us,” he says.
And while the support by the government through the Canada Emergency Wage Subsidy and rent relief has helped, Gooch notes, “For 2021, the four busiest airports only have that rent deferred. They typically pay 85 per cent of that, so most of that will have to be paid back.”
Gooch continues, “there is $686 million for infrastructure, but that requires contributions from the airports and, of course, many have been running through their cash reserves to keep the operations open. And there’s about $271 million in the form of direct grants, but we still don’t know how much will go to whom and when that will be.”
On the labour side, Robert Donald, executive director of the Canadian Council for Aviation and Aerospace, said that before the pandemic the industry needed an additional 55,000 workers by 2025 and Canadian colleges were only producing 25 per cent of what we needed. “As the recovery takes hold, it would be foolish to believe we will be able to rehire all of those people that were laid off. Our focus is very much on working with industry, government and, in particular, educators, to try and figure out how we can meet that surge in demand for maintenance and postponed maintenance. There’s going to be a massive surge of pent-up demand. If we don’t have the MRO capacity to deal with that, that work goes offshore,” he warns.
Mueller agreed, “The competitive advantage of our industry is very much the skilled workforce and we need to retain those workers because when the work does come back we need to have those workers or those work packages are going to go somewhere else.”
Indeed, maintaining, retaining and recruiting a skilled workforce is going to be paramount for Canada’s industry to recover and emerge as a global competitor, especially with all of the activity currently underway and on the horizon.
“What we’ve been looking for is an industrial policy. We’ve been falling down the global rankings over the years. So the support isn’t just money but a broader policy, which leads to more innovation and people being schooled correctly,” says Grant McDonald, global and Canadian sector leader for KPMG’s aerospace and defense industry practice.
Even without such a policy, McDonald says the future is still bright for companies that are innovative, technology-based and digitally transformed.
“During a pandemic, some might cut research and development (R&D), but it’s not something that should be chopped in crisis mode,” says McDonald. “It’s something that you should be increasing or at least maintaining. You’ll come out ahead of the pack at the end. It’s that long term thinking.”
PAL and De Havilland Canada, which have a long history of collaboration, have taken that advice to heart. The pair of Canadian companies are jointly developing a new dash-8 aircraft called the Dash 8 P-4 for maritime, patrol, intelligence, surveillance and reconnaissance, search and rescue, training and multi-mission applications.
“The Dash 8 platform is already the most modern, most sustainable, most rugged and long-lasting turboprop platform on the market. And like it’s predecessors, it has proven to retain its value for the very long-term,” said a communications spokesperson for De Havilland Canada. “De Havilland is investing significant capital and introducing enhancements that will ensure the Dash 8 remains at the forefront of the regional aircraft market around the world.”
Since the onset of the pandemic, De Havilland has committed itself to mitigate the risks to its organization and people. “And we are focused on supporting our customers by supporting the return to service of their aircraft with our uninterrupted support network and service offerings,” said the spokesperson. “We’re developing solutions to drive down their operating costs and improve their operations (including engagement from our suppliers), and successfully delivering aircraft amidst the current travel restrictions through onsite and remote delegated processes.”
More than just planes
Globally, there is also a fierce amount of activity around reducing aerospace emissions, developing new maintenance technology, and the resurgence of supersonic travel capabilities. According to a recent KPMG report entitled Aviation 2030, there is a major technology disruption underway.
To meet 2050 emission goals, airports and OEMs have announced some radical projects. Heathrow Airport has announced that the first electric-hybrid aircraft to be put in service will be exempt from landing charges for a year. The Norwegian government announced that it wants all domestic flights to be electric by 2040.
The true challenge in all of this is the battery power to weight ratios. But the industry is answering. Wright Electric and Easyjet have announced plans for a 180-seat electric aircraft to fly routes of up to 482 kilometers, with an aim to operate by 2027. And Zunum Aero, backed by Boeing and JetBlue, is working on a hybrid electric aircraft for regional routes, with a goal to be in operation in the near future.
And while, there are a host of others delving head first into electric technology, the report does state that many observers think that the goal of widespread all-electric commercial aviation is decades, not years away.
On the maintenance side, which represents 20 per cent of a plane’s operating cost, there are myriad companies working on robotic maintenance drones to be used for MRO inspections. The report suggests MROs will need to reshape their business model around a new paradigm of condition-based maintenance.
And the resurgence of supersonic technology has created interest and development within the industry and spurred a new generation of startups—a renewed enthusiasm that’s concentrated on business jets, specifically. According to the KPMG report, Aerion is building a supersonic business jet that will be taking its engine from GW Aviation and avionics from Honeywell Aerospace. And Boom Supersonic, which is building a supersonic 55-seater, has pre-sold 30 planes to Japan Airlines and Virgin Atlantic.
With so much global innovation activity going on, even during a pandemic, there are many opportunities for Canada’s aerospace industry to get in the game. At the time of press, Canada’s industry leaders were anxiously awaiting the Federal Government’s 2021 budget, which was to be announced on April 19. That said, there are many countries around the world that immediately helped their domestic aerospace industry early in the pandemic and have impressive support models.
Developing and budgeting for a support strategy is now a necessity. SMT