In the span of four years, the aviation industry has undergone significant changes since the last in-person air show. The Covid-19 pandemic had a devastating impact on travel demand, leading to the loss of thousands of experienced aviation workers and causing major disruptions in new plane production. However, as air travel demand surges once again, the Paris Air Show is making a comeback, providing an opportunity for companies like Boeing, Airbus, and their suppliers to catch up.
The increased demand has put pressure on order books, leading to higher rates for used aircraft leases and forcing airlines to make compromises. According to aviation analytics firm IBA, there could be approximately 2,100 plane orders during the show as airlines look to replace older aircraft and prepare for future growth in air travel.
In the past year, Boeing has secured large orders or preliminary agreements from customers such as United Airlines, Saudia, Riyadh Air, and Air India. Meanwhile, Turkish Airlines is considering a massive order of around 600 aircraft. Delta Air Lines, Malaysia Airlines, Air France-KLM, and Air Baltic are also potential buyers. Additionally, despite the political climate, Chinese expansion orders may still come through.
However, the major challenge for manufacturers lies in increasing production. Slots for narrow-body jets like the Boeing 737s and Airbus A320s are already sold out for years. As long-haul travel resumes, airlines might also seek to expand their fleets of larger, long-range jets. Yet, customers worldwide have experienced delays in receiving their new airplanes as manufacturers and suppliers attempt to ramp up output. This has limited airline capacity and kept airfares high.
The supply chain issues are expected to persist until 2025, according to Qantas CEO Alan Joyce. Hence, both Boeing and Airbus are working on raising production rates in the coming years to meet the growing demand. The production delays have led to increased lease rates for both new and older planes, as airlines explore alternative ways to increase flight capacity.
For instance, the monthly lease rate for new Boeing 737 Max 8 planes reached around $350,000 in July, compared to $305,000 in January 2020. Similarly, new Airbus 320s are now leasing for $355,000, up from $325,000 in the same period. Older plane versions are nearing pre-pandemic lease rates.
In conclusion, the Paris Air Show is an eagerly anticipated event in the aviation industry, where companies can showcase their latest technology and strike deals. It comes at a time of rebounding air travel demand and increasing pressure on manufacturers to meet the needs of airlines hungry for new jets. Although challenges remain in terms of production and supply chain issues, the show presents an opportunity for the industry to recover and thrive once again.
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