Here is a quick look at the ongoing relationship between the energy industry and its aviation partners, a relationship that sees one strongly shape the other.

The current state of the aviation industry has been greatly impacted by the recent trends in energy related geopolitics. Rising energy, fuel and aviation insurance prices are just some of the complex geopolitical developments that are significantly affecting the current state of aviation as we know it.

What is Geopolitics?

Geopolitics, as its name implies, is the crossroads of the geographic trends, the economic environment and the politics that relate to those two dynamics. In relation to the aviation market, geopolitics involves analysing long term geopolitical activity over past periods and forecasting future patterns to better manage their effects on the industry. Energy geopolitics specifically deals with the drivers relevant to energy and fuel usage.

Recent Trends

The global recession and financial crisis that began in the late 2000s, as well as worldwide government restrictions and conflicts, has perhaps had the most substantial impact on energy geopolitics in recent years. There has steadily been an increase in demand for raw materials and commodities like oil and fuel, despite an economic and political environment that has created uncertain access to those same materials. This demand coupled with a perceived unsteady supply, has greatly contributed to the fluctuating fuel and energy prices that the aviation industry has had to weather.

A good aviation insurance policy is a key strategic partner for aviation risk management and geopolitics have made an impression on policy rates as well. Energy geopolitical tensions are just one of the factors that have contributed to the risks involved in aviation, and policy coverage has had to increase to account for that change.

While dealing with rising energy cost and related concerns, the aviation industry is also under increasing pressure to reduce its carbon footprint through alternative energy development. Alternate energy production costs, government regulations, oil prices and global politics all play a part in how the industry approaches environmental impact improvements. Fortunately, the industry has taken several proactive steps and has seen considerable progress in its steps to reduce aircraft emissions through technological solutions like redesigned aircraft, efficiency innovation and the creation of sustainable bio-fuels. Notably, the aviation industry has seen gains in achieving these goals not yet matched by most other transportation sectors.

According to a Reuters 2011 report, the world has shown some small recovery gains from the recent recession. However while global development has shown signs of rebounding, the aviation landscape will continue to face on-going challenges due to the regulations and geopolitical dynamics unique to the industry. That is why stating that energy geopolitical analysis is important to the future of aviation is a vast understatement. Detailed and on-going analytical studies of geopolitics are essential to the aviation industry's ability to adapt to the rapidly changing geopolitical environment. Understanding what is new, what is constant and what has happened in the past, will allow the aviation industry to thrive rather than fail, placing the ball firmly in energy consultant’s courts. The aviation is in need of advice and the energy industry need to provide the answers.