A global shortage of new planes caused by supply-chain hindrances and staff shortages will result in higher airfares for the foreseeable future.
- With the COVID-19 pandemic winding down, demand for air travel is increasing, and so are air travel prices.
- This, combined with high oil prices, staff shortages, and plane shortages, is increasing the cost of air travel, and it will only get worse with China opening up its borders to the world again.
- Major airlines are attempting to compensate by purchasing new planes, but the demand has created a backlog through 2029 of over 12,720 orders.
- Supply-chain issues are further exacerbating the problem and delaying orders as much as two years, meaning the outstanding orders may take eight or more years to deliver.
Why it’s Important
The slowdown is bad news for air travelers who face years of higher costs. The demand for new planes is exceeding the availability and production capacity.
Manufacturers like Boeing and Airbus are already reluctant to take additional orders. Airbus has struggled to meet its yearly goal of 700 planes in 2022 due to supply-chain issues and labor shortages slowing the process. These factors have the industry stressed, but the backlog isn’t going to be fixed for the better part of a decade. Boeing is facing 850 orders this year and is facing similar issues.
“With carriers from United Airlines Holdings Inc. to Air India Ltd. placing, or looking to place, jet orders that number in the hundreds, Boeing Co. and Airbus SE are crowing variously about blockbuster deals. But supply chain constraints mean those planes won’t be delivered until possibly years down the track,” says Bloomberg.
The slowdown has also meant that orders that should be on track for delivery have been delivered late. Air Lease Corp founder Steve Udvar-Hazy says every order for the past two years has been behind schedule.
“We haven’t gotten one airplane on time, whether it’s a 737 Max or a 787 or an A330, A350. And the worst has been the A321neo. We’ve had delays of as much as six or seven months comparing contract delivery month to actual delivery. It’s a combination of supply chain issues, ramping up too quickly, and labor shortage. Production workers can’t work from home. So it’s been a real problem,” he says.