ISTAT Jetrader - Winter 2021 - 42

FIGURE 2: PERCENT OF POPULATION WITH AT LEAST ONE DOSE
AS OF 5 DECEMBER; NARROWBODY FLEETS
Source: One World in Data, Bernstein analysis
That is because it is so transmissible, we will see cases even
if a population is 100% vaccinated. This means that a zerotolerance
policy would keep restrictions in place forever. This
is clearly not practical and not necessary if hospitalizations
are kept at manageable levels through vaccination policies.
Governments finally are starting to realize this, which means
reopening. The spread of the new omicron variant, which so
far has not shown high virulence, further points to the futility
of zero-tolerance policies, despite new travel restrictions put
in place in the short-term. We expect COVID-19 in its multiple
variants to be manageable with vaccines and likely soon with
antiviral drugs (e.g., Pfizer's Paxlovid).
One big barrier is China, which has been following a
zero-tolerance policy. This led to lockdowns in August that
crushed even domestic travel. With severe border restrictions,
international traffic in and out of China has been consistently
down more than 90% relative to 2019 levels. We expect
little action before the Beijing Winter Olympics in February
and Paralympics in March, as the country cannot afford a
COVID-19 outbreak. But come the spring of 2022, a reopening
of the Chinese market would be possible. How that reopening
proceeds will depend on trade-offs for the Chinese government,
with the risk of new COVID-19 cases versus the social and
economic penalties of continued lockdowns ahead of the
Central Committee meetings in November 2022. Also playing
into the reopening decision in China will be progress on its
own mRNA vaccines. But if the rest of the world has opened by
42 * THE OF F I C I AL PUBL I CAT I ON OF ISTAT
spring 2022, we expect it will be hard for China to remain closed
over the long term.
Everything is not perfect for a recovery. Russia is still
fighting through outbreaks, enabled by its relatively low
vaccination rate. One-off travel restrictions are coming and
going. Definitions of acceptable vaccines vary as efficacy
levels are not the same. But come April 2022, we believe the
economic and social pressures will be too great to maintain
restrictions.
All of this means that during the next six months, we should
be able to finally see growth in travel come back that should
lead to growth in the fleet and more demand for new aircraft.
We expect narrowbody capacity to recover to 2019 levels
during 2022 and widebody capacity to recover during 2024. In
the meantime, deliveries should come to support replacement
needs, which we see as more substantial than what we saw
during the 2008-2009 global financial crisis. The difference
is, first, because of a larger number of airplanes have been
parked and they have been parked for longer periods. Second,
and more importantly, pressure to reduce carbon over the next
several years should accelerate replacement plans. After a
difficult two years, therefore, in the spring of 2022, we should
finally see the long-awaited upside for the commercial aircraft
OEMs and their suppliers.
Douglas Harned is the managing director and senior analyst of
aerospace and defense at Sanford C. Bernstein & Company.
ISTAT Jetrader - Winter 2021

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