February 17, 2020
CHENNAI — Even as the business community across the world is keeping its fingers crossed on the eventual impact of the coronavirus in China, a view is fast gaining ground that New Delhi has to be nimble-footed in not only blunting the virus's effect on the country but also leveraging it to India's advantage.
On the one hand, a sense of apprehension is palpable as industry leaders have spoken out about possible disruption to the broader supply chain. In the last few days, major players in India's pharmaceutical and mobile phone industries have noted how if the virus continues to prompt a shutdown in China, local production and supply of everything from handsets to a few generic drugs may come to a halt.
"The bigger issue is that the supply chain constraint is also likely to hit India. It will take at least 2 to 3 months for the supply chain to get back to the normal mode and hence, there will be some amount of disruption in the global supply chain till that time," said the head of an auto component major in Chennai, who did not want to be named.
"China is an integral part of the global supply chain, including for the automotive sector. The more advanced the technology, the more likely that those parts are being made in China. A lot of the players, including those in the passenger vehicles segment, are affected in the current scenario. While the Chinese government has said that factories can start functioning, the issue relates to third-party logistics services where the truck transporters typically use drivers who are migrants and the question is whether they will be allowed back immediately. A lot of the ports are fully blocked," he continued.
Given the issues relating to China, of late there has been a focus on de-risking, including in the automotive and hi-tech industries. Some of the businesses in the mobile phone space have already gone to Vietnam. Auto industry sources also pointed out that China has not been as cost competitive as in the past.
Global companies want to create a manufacturing hub in India by recreating what they did in China.
"For quite some time, global companies have been looking at options to build supply chain capabilities in India as an alternative to China. There is generally a move to look at de-risking. The fact that global companies are looking at non-Chinese options is an opportunity for India," an auto industry source said.
"The other option that the global companies are looking at is creating a manufacturing hub in India by recreating what they did in China in the past and using India as a manufacturing export base," said a ranking official of an auto component company.
"India is in a good position to take advantage of this, though the Chinese scale is huge. But there are some segments which are supply chain-based to create some kind of manufacturing hub," the official continued. "Trade-related competition from other countries should be viewed from the point of creating enough employment in the country. That is when India will grow faster."
Off the coast of Chennai — Photo: Vinoth Chandar
According to Pramodh Sharma, chairman of the Fifth Avenue Group, a sourcing management firm based out of Hong Kong, "The issue of coronavirus is one with serious global ramifications. Across the world businesses are being affected. China is the factory of the world, there are few businesses which do not get material from China either fully manufactured or as specialized parts'."
He reckoned that "this can be a serious opportunity for India as the world can be made to see us as a serious alternative. Countries and business houses which were China-centric are now forced to look at risk mitigation and viable alternatives in the medium and long term," he added.
There is a caveat though. For India to make the most of this opportunity, New Delhi will have to hasten infrastructure development. There is a certain consensus that India has never fully utilized opportunities that came in its way. This is indeed true when it comes to the trade war between China and the US. "It is up to not just entrepreneurs but also the government to be proactive and move forward decisively. If that happens, then India has a giant opportunity which can truly spur our growth," Sharma said.
The onus is on the government.
With the right demographic, language advantage and the creativity, India has the ability to convert the present crisis into an opportunity. "In the long-term, India can certainly leverage this to its advantage in terms of getting to move more businesses to our country, provided we learn our lesson and invest in creating capacities to lap up such opportunities from such fall-outs, though one wishes such fall-outs happen not for reasons of viral scare," said Srinivas Acharya, managing director of Sundaram Home Finance.
"Those Indian firms with plants in China have certainly suffered, but the impact may not be very high because of the ongoing slump here. We always knew that for one reason or the other, there could be flight of manufacturing bases from China, but we do not seem to have prepared ourselves for such an eventuality to capitalize on it," he added.
All the same, the consensus view is that the onus is squarely on the government to seize the opportunity. The world is not simply waiting to get into India. There are plenty of others who are readying the red carpet. It is high time the authorities in India did the same.
For the coming weeks, Worldcrunch will be delivering daily updates on the coronavirus global pandemic. Our network of multilingual journalists are busy finding out what's being reported locally — everywhere — to provide as clear a picture as possible of what it means for all of us at home, around the world. To receive the daily brief in your inbox, sign up here.
Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.
October 17, 2021
It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.
More than a year later today, experts believe that air traffic won't return to normal levels until 2024.
But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:
Cleaner aviation fuel
The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.
While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.
Fees imposed on the airline industry should be funneled into a climate fund.
In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.
Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.
High-flying ambitions for the sector
Hydrogen and electrification
Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.
One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.
Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.
New aircraft designs
Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.
International first class will be very nearly a thing of the past.
The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.
Aerial view of Rome's Fiumicino airportcommons.wikimedia.org
Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.
The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.
Data privacy issues
However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.
Auckland Airport, New Zealand
The billion-dollar question: Will we fly less?
At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.
Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.
40% of Swedes intend to travel less
According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.
But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.
At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.
From Your Site Articles
- How Persian Gulf Airlines Surged To Top Class Of Travel Industry ... ›
- How Countries Are Coping With A Tanking Tourism Industry ... ›
- COVID Recovery? End-Of-Summer Checkup On Travel Industry ... ›
Related Articles Around the Web
Premium stories from Worldcrunch's own network of multi-lingual journalists in over 30 countries.
German public international broadcaster
SOUTH CHINA MORNING POST
South China Morning Post (SCMP) is an English-language daily published in Hong Kong. Co-founded in 1903 by the British journalist Alfred Cunningham, the newspaper has an estimated circulation of 104.000. It is currently owned by Alibaba group.
La Repubblica is a daily newspaper published in Rome, Italy, and is positioned on the center-left. Founded in 1976, it is owned by Gruppo Editoriale L'Espresso.
E24 NÃ¦ringsliv is a Norwegian, online business newspaper launched on 18 April 2006. In the course of the first week of operations it became the largest business web site in Norway. In week 46, 2008, it had 575,000 unique users per week.
Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!