Now that air traffic is starting to increase again, insurers expect the volume of claims to increase at the same time. Dave Warfel (pictured), AGCS’s regional head of aviation, said the industry is “already starting to see a rise in claims” due to the rapid increase in passenger traffic compared to the first year of the pandemic, when border closures, travel bans, and home orders were widespread.
During the COVID recovery period, there are a few key exposures that AGCS’s global aviation team is monitoring, which are detailed in the specialist insurer’s ‘Aviation Trends After Covid’ report.
Air rage, while not a new topic, is of growing concern to both airlines and airline insurers. According to AGCS, this is particularly problematic in the United States, where 3,000 incidents of unruly passenger behavior were reported to the Federal Aviation Administration in the first six months of 2021 — most involving passengers refusing to wear masks. This marks a dramatic increase in the pre-COVID annual average of 150 incidents. The AGCS report notes that unruly passengers can later claim that they were discriminated against by the airline in these cases, even if the passengers were wrong, making this a trend insurers should be aware of.
“We are also focused on the technical expertise and experience needed to operate aircraft safely,” Warfel said Insurance company. “For pilots, most airlines have a great infrastructure around pilot training, they continue to send new information to their pilots and get it through simulators, so I think for the most part the pilot population has been able to share their experience.
“But in terms of the ground crew who are responsible for parking, taxiing and all ground handling activities for the aircraft, there have been a lot of layoffs worldwide during the pandemic – so we’re keeping a close eye on that as well. It’s a very important part of the operation, and it’s also an area where claims are generated, in terms of ground damage, ground collisions and so on.
“So we continue to engage in dialogue with our aviation customers in the area: ‘How do you onboard new employees or bring back employees who may have been on leave? And how do you plan to maintain a strong safety culture, especially in ground handling operations?’”
For several years now, concerns have been raised in the global aviation industry about pilot shortages – a problem that could increase in a post-pandemic wave of air travel. The AGCS report states that the industry will face a pilot shortage in the medium to long term, with more than a quarter of a million pilots needed over the next decade. Even before the COVID-19 pandemic, the massive increase in air traffic — the annual growth in passenger numbers in China alone was 10%+ per year as of 2011 — meant that the demand for pilots was already outstripping supply.
“The pilot shortage existed before COVID, and it will not go away anytime soon. I think it will continue on its own in the future,” Warfel said. “But the airlines are responding. Some of them have made direct agreements with flight training facilities to train the new generation of pilots, and some have even bought or started their own in-house pilot training schools to bring new pilots into the network, train them and set their own hours.
“It is clear that the airlines certainly see the shortage of pilots as a risk on the horizon. In fact, it is probably one of their biggest obstacles to growth: getting the number of skilled pilots to continue to meet the growing demand from air passengers.”
Despite these challenges, Warfel described the industry as “optimistic” about the future. During the pandemic, many airlines took the opportunity to carry out fleet upgrades and fleet purchase plans. Some are also introducing new routes in their catalog, especially in Europe and Asia-Pacific. According to the AGCS report, more than 1,400 new air routes are planned for 2021 — more than double those added in 2016 — powered by Europe (more than 600) and Asia-Pacific (more than 500), with regional airports the main beneficiaries. will be.
“While COVID-19 was a bit of an abrupt halt to growth, many airlines generally used it as an opportunity to reset and focus on building for the future,” Warfel noted. “Some of their plans may have been delayed by 12 or 18 months, but we haven’t really seen a significant decline in long-term optimism. They are not distracted by COVID from their growth plans.”