Aircraft mega orders to continue as delivery slots remain scarce
Record demand from customers has created production bottlenecks at the two manufacturers
London: Large-scale aircraft orders are a trend that’s set to increase in the near future as supply chain-issues continue to snag the aviation industry and create a scarcity of available aircraft, according to Avolon Holdings CEO Andy Cronin.
The drive for massive deals comes from the difficulty to secure delivery slots as well as mounting competition from more airlines that have become bigger and more successful, Cronin said in a phone interview after Avolon reported earnings on Thursday.
This year has already seen two record orders in rapid succession, first from Air India and shortly thereafter from IndiGo, which placed a deal with Airbus for 500 aircraft at the Paris Air Show in June. And that’s before Turkish Airline follows through on a proposed plan to take as many as 600 jets, while serial buyer Emirates has said it will also come back to the market later this year.
Carriers with landmark orders under their belt, such as Ryanair Holdings for 300 narrowbody Boeing aircraft, want to ensure they can reserve delivery slots in order to receive the planes toward the end of the decade, Cronin said.
“It’s a concern that the available slots will be gone quite quickly,” Cronin said.
Avolon itself was among active buyers at the Paris show, placing orders with both Airbus and Boeing. The record demand from customers has created production bottlenecks at the two manufacturers, which are almost sold out until the end of the decade on their most popular jets.
While airlines reported a surge in demand this summer as passengers rushed abroad for sunny vacations, they’ve also grappled with constricted capacity because planemakers have struggled with a shortage of parts amid the Ukraine war and the aftermath of the pandemic.
Cronin said he “undercooked” the time it would take to get production rates back to where they were prior to the pandemic. He now predicts it will be at least another couple of years for stability to return, a sentiment also echoed by both Airbus and Boeing executives.