The aviation industry is gearing up for a challenging summer this year with travel demands being projected to exceed pre-pandemic levels, while aircraft deliveries have dropped sharply due to production issues at Boeing and Airbus.
Air carriers are grappling with the dual challenge of maintaining operations with fewer aircraft and coping with high levels of passenger demand. Airlines are spending billions on repairs to keep fleets operational, less fuel-efficient jets, and paying a premium rate to secure planes from lessors. Nevertheless, some airlines are being forced to reduce flight schedules due to the scarcity of available aircraft.
On the other hand, global travel is expected to reach historic highs, with an estimated 4.7 billion people anticipated to travel in 2024, compared to 4.5 billion in 2019, despite the supply constraints.
Industry analysts foresee summer surge despite crisis
According to John Grant, senior analyst at travel data firm OAG, the global aviation sector is looking forward to a robust performance from airlines during the summer, accompanied by higher airfares.
“We can expect a strong performance from airlines throughout the summer with some particularly high airfare,” said John Grant.
In December last year, the International Air Transport Association (IATA) had initially forecasted a 9% annual growth in global airline capacity for this year, though, Boeing’s safety crisis, which commenced in the starting of the year, has thrown a wrench into these projections.
A senior associate at AeroDynamic Advisory, Martha Neubauer, predicted that the passenger carriers will receive 19% fewer aircraft this year than they expected because of production issues at manufacturers – Boeing and Airbus.
Neubauer also added that as several US carriers depend on Boeing’s 737 MAX planes, they are going to receive 32% fewer aircraft than planned a year ago.
Production woes at Boeing and Airbus
While Boeing’s production has been hampered following a mid-air panel blowout incident in January, Airbus is facing challenges, with potentially 650 Airbus A320neo jets grounded in the first half of 2024 for inspections to address a flaw in RTX Corp’s Pratt & Whitney engines.
In response to the aircraft shortage, airlines have been forced to make adjustments, with low-cost carriers like Ryanair cutting routes in Europe, and major carriers like United and Southwest scaling back flying and adjusting hiring plans in the United States.
Airlines turning to leasing market
To mitigate the impact of the aircraft shortage, airlines are turning to the leasing market, where lease rates for new aircraft have reached record highs. However, increased leasing, repair, and labor costs are expected to eat into profits, despite high demand for air travel.
Although passenger fares have seen year-on-year decreases, rising inflation and month-on-month fare increases may dampen travel enthusiasm for some Americans this summer, according to a survey by the Vacationer travel website.
