BrazilBRICS enlargement: Five impacts on the aviation sector
The nearing admission of Saudi Arabia and the United Arab Emirates into the BRICS alliance is a significant milestone in the global geopolitical landscape and is set to open up opportunities across sectors. Linus Benjamin Bauer, Managing Director of Bauer Aviation Advisory, sheds light on how inclusion could impact the aviation sector.
Established in 2009, BRICS was set up by five countries – Brazil, Russia, India, China and South Africa – with the aim to provide a counterweight to the G7 (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States).
BRICS currently represents around 40% of the world’s population and more than a quarter of the world’s GDP, but with the soon to be formalised inclusion of six new countries (the UAE, Saudi Arabia, Iran, Egypt, Ethiopia and Argentina) that number will be lifted significantly.
In the run up to the formal admission date (1 January, 2024), much attention is being given to the economic and diplomatic implications on countries, regions, and sectors.
Looking at the move from an aviation lens, the impact will be significant – across disciplines such as trade routes, commercial agreements, manufacturing, supply chains, maintenance and more. Five notable impacts foreseen:
Strengthening trade routes
The enlargement of BRICS could lead to greater logistical coordination among countries. A surge in air travel routes between BRICS member countries is anticipated, including from/to the UAE and Saudi Arabia. Such routes will play a vital role in the shipment of goods and logistics, presenting the global aviation industry with new opportunities for cargo operations.
Alliances in aircraft manufacturing
The UAE and Saudi Arabia have been investing heavily in their domestic aviation industries. Membership in BRICS could fast-track collaborative ventures in aircraft manufacturing among member countries. Technology transfers, joint R&D projects, and co-production agreements could become more frequent, thereby altering the competitive landscape and opening new innovation avenues.
Investments in research & development
The UAE and Saudi Arabia bring substantial financial muscle to BRICS. Increased capital will funnel into the aviation sector, spurring advancements in materials science, engineering, and sustainable aviation technologies. For example, initiatives focused on developing more fuel-efficient engines or lightweight composite materials could gain momentum.
Diversification of supply chains
BRICS nations have long been keen on diversifying their supply chain to reduce dependency on Western markets. With the inclusion of the UAE and Saudi Arabia, aviation-related supply chains could see certain re-design, with the potential for greater localization of component manufacturing and materials sourcing in member countries.
This diversification will offer greater resilience against supply chain disruptions like the ones experienced during the pandemic, as the majority of manufacturing still takes place in Western markets and China.
Regulatory harmonization
Standardization of regulations is a persistent challenge in the aviation industry. As new members of BRICS, the UAE and Saudi Arabia may push for more harmonized standards around aircraft manufacturing and operations, simplifying compliance procedures and reducing time-to-market for new aircraft and components.
For players in the BRICS aviation sector, the road ahead is filled with both potential and pitfalls, meaning strategic planning and adaptive execution will be key to capitalize on the new geopolitical order.
