Travel is reactivated but there are not enough planes

While airlines like United Airlines Holdings Inc. Y Air India Ltd. placing or about to place orders for hundreds of planes, Boeing Co. and Airbus SE boast of their sales successes. But supply chain constraints mean those planes won’t be delivered for a few years: Jefferies LLC estimates there are currently 12,720 planes backordered.

All of this means that the high airfares that people have bitterly complained about in recent months are here to stay, and things could get worse before they get better.

“People got used to lower rates during the pandemic, and reopening China will make things worse”says Ajay Awtaney, founder of the frequent flyer website LiveFromALounge.com. “It’s not just about the shortage of planes, but also about other factors like the price of oil.”

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Although an airline with deep pockets in a specific jurisdiction may have the financial wherewithal to lower prices, that is likely to cause other carriers to stumble, “Which in the long run would cause even higher fees”Awtaney said.

Boeing and Airbus, the aeronautical giants that largely enjoy a duopoly on the supply of passenger planes, have sold out of stocks of their most popular single-aisle models through at least 2029.

Demand from airlines is compounded by supply chain issues, from sourcing necessary components to labor shortages.

Earlier this month, Airbus abandoned its goal of delivering 700 passenger planes this year citing supply chain problems, and had already warned that rising energy costs would hit smaller, more heavy-consuming producers especially hard. of energy, such as those that manufacture castings and forgings.

According to Air Lease Corp. founder and aviation legend Steve Udvar-Hazy, every plane delivered to one of the world’s largest lessors in the past two years has been late.

“We have not received any aircraft on time, whether it is a 737 Max, a 787, an A330 or an A350.”it states. “And the worst has been the A321neo. We have had delays of up to six or seven months comparing the contractual delivery month with the actual delivery. It’s a combination of supply chain problems, growth that’s too fast, and labor shortages. Production workers cannot work from home. So it’s been a real problem.”

The thousands of planes that airlines stored in deserts around the world, uncertain when demand would return as travel collapsed due to the COVID pandemic and countries’ border closures, are also contributing to shortages.

Hundreds of them have not been reinstated in fleets, either because they are now in need of intensive maintenance after not being used for so long, or because airlines plan to phase them out and haven’t bothered to put them back on their schedules.

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 to a foreign holiday for the first time in years.

It could also mean flying older planes.

“As a last resort, airlines could extend their ownership cycles,” says Sunny Xi, director of Singapore-based consultancy Oliver Wyman. Historically, Asian airlines plan their fleets around 12-year cycles, which is shorter than most other regions. But during the restructuring that companies have suffered in recent years, “several airlines have expanded existing fleets and may do so again in the future”he claimed.