Headwinds threaten air travel rebound

MANILA, Philippines — An aircraft maintenance firm has warned that the recovery in air travel could be thrown off track any time, as the triple whammy of geopolitical conflict, rising prices and economic slowdown may dampen consumer demand.

Elmar Lutter, president and CEO of Lufthansa Philippines Technik (LTP), told The STAR that the aviation industry has shown signs of rebound, with demand for air travel picking up as countries lift their pandemic restrictions.

However, he cautioned aviation players that the recovery could be short-lived if geopolitical tensions, coupled with worldwide inflation and threats of a recession, worsen.

“The recovery is in full swing. Demand for flying is quite high and it has beaten expectations. Six months ago, nobody was actually counting on such a recovery. However, it is fragile, especially as nobody knows what’s next for the world,” Lutter said.

“War, inflation and recession – these are the global things that could totally turn it around for us. At the moment, it looks good for aviation despite the problems that are already there,” he added.

Aircraft maintenance, repair and overhaul (MRO) service providers like LTP are hoping that the pickup in flight demand will result in additional contracts for plane conditioning.

“With the demand for flying, MROs are also strong because many aircraft are back from parking and there’s really quite a good workload for all the MROs in the world,” Lutter said.

At present, Lutter said the bulk of MRO orders that LTP has come from foreign carriers, such as Korean Air and British Airways, which are maximizing the recent lifting of border controls to cater to the resurgence in air travel.

LTP intends to deliver 1.3 million man-hours of work for the year. As of July, the Philippine unit of Lufthansa Technik AG has logged 600,000 man-hours and hopes to fulfill another 700,000 until December, when flight demand is at its highest.

LTP has reinstated at least 70 percent of its pre-pandemic capacity, although it admitted it could be difficult to revert to full operations this year. In spite of this, LTP is scanning both the local and regional terrains for possible expansion of its MRO base.

In August, LTP opened Hangar 1A in its Manila hub to raise its MRO capacity by 20 percent and, in turn, require the employment of an additional 275 personnel.

LTP, a joint venture between Lufthansa Technik AG and MacroAsia Corp., employs about 2,600 Filipinos in its various facilities in Manila, Clark, Cebu, Davao, Kalibo and Puerto Princesa.