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Paris Air Show Returns Amid Surge in Air Travel Demand
The Covid-19 pandemic, an aviation industry labor shortage, and the fluctuations in new jet production rates have been some of the major changes that have taken place in the aviation world since one of the biggest air shows was held four years ago. But now, the Paris Air Show, a trade event for aviation companies to showcase new technology, present commercial and military aircraft, and strike deals is returning. The question is whether manufacturers such as Boeing, Airbus, and their suppliers are ready to catch up as airlines are eyeing to feed their hunger for jets amid surging demand for air travel.
Airline Demand for New Planes and Future Growth in Air Travel
Aviation analytics firm IBA projects that orders for around 2,100 planes could come through the Paris Air Show as more airlines replace older aircraft and prepare for future growth in air travel. According to IBA's chief economist, Stuart Hatcher, buyers could include Delta Air Lines, Malaysia Airlines, Air France-KLM, and Air Baltic. Turkish Airlines' chairman revealed to reporters last month that the carrier is also looking to purchase around 600 aircraft; however, whether that would come together in time for the show remains unclear.
Increase in Production and Supply Chain Issues
The major obstacle for manufacturers right now is handling production rates. Narrow-body jet slots are already sold out for several years, and now that long-haul travel is resuming, airlines are beginning to look into expanding their larger, long-range jet fleets. However, airlines have been forced to wait longer than expected for new planes as Boeing, Airbus, and a host of other suppliers worldwide try to step up output. Consequently, airlines are unable to maximize capacity, which has kept airfares inflated. While Qantas CEO Alan Joyce anticipates that the supply chain issues will last until 2025, Boeing and Airbus are working to raise production rates in response to the demand.
Lease Rates for Old and New Planes
The delays in production have also led to an increase in new and old aircraft lease rates as airlines search for alternative methods to ramp up flights. According to IBA estimates, new Boeing 737 Max 8 planes were being leased for about $350,000 a month in July, which marks an increase from $305,000 in January 2020. New Airbus 320s are also being leased for $355,000, which is up from $325,000 over the same period. However, the rates for older versions remain similar to pre-pandemic levels.
The aviation industry is experiencing a boom in demand after a tough year in which global lockdowns and travel restrictions brought the industry almost to a standstill. But now, it is about meeting the challenge of rising to the occasion, embracing the increased demand for air travel, and dealing with the supply chain constraints to ensure the aviation industry reaches its full potential.
The Paris Air Show's return amid surging air travel demand has highlighted the growing need for new planes in the aviation industry. As the industry faces supply chain constraints and production rate challenges, airlines are increasingly turning to leasing old and new aircraft to fulfill the increasing demand. However, lease rates for new planes have also risen, and airlines have been forced to wait for longer than expected to receive new aircraft, resulting in inflated airfares and reduced capacity. These changes in the industry present both challenges and opportunities for new businesses. With airlines looking to expand their fleets, there is a growing need for new technology and innovative solutions that can help boost productivity, streamline supply chains, and reduce lead times. Additionally, new businesses can help airlines find alternative ways to ramp up flights and decrease delays and inefficiencies related to leasing aircraft. Overall, new businesses that can navigate the supply chain constraints and support the growing demand for air travel could find success in the aviation industry's post-pandemic boom.