The airline industry is set to face ongoing challenges as a result of shortages in aircraft, labor, and parts, dampening hopes for relief in escalating airfares amid surging travel demand.
In a global aviation outlook report by ING Bank NV, the industry is noted to be constrained by persistent supply chain issues on multiple fronts. Predictions indicate that air travel will surpass pre-pandemic levels this year, yet manufacturing setbacks at Boeing and engine flaws at Pratt & Whitney are hindering aircraft availability and tempering the recovery.
According to ING, both Airbus SE and Boeing are contending with an unprecedented order backlog, driving up demand for pre-owned aircraft and subsequently increasing leasing rates, notably for popular models like the Boeing 737 and Airbus A321. The scarcity of skilled personnel is further causing delays in retrofitting or upgrading older aircraft.
Ongoing supply chain disruptions are prompting airlines worldwide to revise growth strategies, with some even reducing flight volumes. In the Asia-Pacific region, carriers such as Singapore Airlines, Qantas Airways, and Air New Zealand are grappling with delays in aircraft deliveries, unexpected engine maintenance, and logistical challenges.
Despite prevailing challenges, global airfares are expected to remain elevated, with European ticket prices reportedly outpacing inflation by 15% in early 2024, according to the report. Passengers, showing a strong desire to travel, appear willing to bear the increased costs.
Key points highlighted in the report include:
- Various factors like delivery delays, additional maintenance requirements, extreme weather events, geopolitical tensions, and labor disputes will impact airlines’ profitability this year.
- The industry’s carbon emissions are likely to approach pre-pandemic levels in 2024. Despite heightened environmental concerns, air travel remains a priority for many individuals, particularly among younger demographics.
- India’s burgeoning population and growing affluence position the country as a significant hub for future airline expansion.
