while airlines like United Airlines Holdings Inc. why Air India Limited With orders placed or placed for hundreds of aircraft, The Boeing Company and Airbus SE claim their sales success. But supply chain constraints mean those planes won’t be delivered for a few years: Jefferies LLC estimates that 12,720 planes are currently backordered.
All of this means that the high airfares that people have complained about in recent months will remain in place, and things may get worse before they get better.
“People have become used to lowering rates during the pandemic, and China’s reopening will make things worse”says Ajay Avtani, founder of frequent flyer website LiveFromALounge.com. “It is not only about the lack of planes, but also about other factors such as the price of oil.”
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While an airline with deep pockets in a specific jurisdiction may have the financial wherewithal to lower prices, other carriers are likely to stumble. “Which will lead to even higher fees in the long run”Avtani said.
Boeing and Airbus, the aeronautical giants that largely enjoy a monopoly on the supply of passenger planes, have sold out stocks of their most popular single-aisle models until at least 2029.
The demands on airlines are exacerbated by supply chain issues ranging from sourcing essential components to labor shortages.
Earlier this month, Airbus abandoned its target of delivering 700 passenger planes this year, citing supply chain problems, and had already warned that rising energy costs would push smaller, more heavily consumed producers. Particularly hard will be the hitting of energy, such as castings and forgings forming.
According to Air Lease Corp. founder and aviation legend Steve Udvar-Hazy, every plane delivered to one of the world’s largest lessors over the past two years has been late.
“We haven’t received any aircraft on time, whether it’s a 737 Max, 787, A330 or A350.”He says “And the worst has been the A321neo. We have had delays of up to six or seven months with the actual delivery compared to the contracted delivery month. It’s a combination of supply chain problems, too-rapid growth and labor shortages. Production staff cannot work from home. So it’s been a real problem.”
Thousands of aircraft that are stored in deserts around the world, unsure when demand will return as travel collapses due to the COVID pandemic and countries’ border closures, are also contributing to the shortage.
Hundreds of them have not been restored to the fleet, either because they require intensive maintenance after not being used for so long, or because airlines plan to phase them out and put them back on their schedules. Haven’t bothered to.
The end result for the flying public is exorbitant fares, which could rise further as business travel returns and more people are willing to treat themselves as vacationers overseas for the first time in years.
It could also mean flying older planes.
“As a last resort, airlines may extend their ownership cycles,” says Sunny Shi, director of Singapore-based consultancy Oliver Wyman. Historically, Asian airlines plan their fleets around a 12-year cycle, which is shorter than in most other regions. But companies have suffered losses in recent years during restructuring, “Many airlines have expanded existing fleets and may do so again in the future”she claimed.