Yahoo Finance Passengers face four years of steep fare rises after safety turmoil at Boeing
Airline passengers face years of higher fares as the safety crisis plaguing Boeing is predicted to limit plane deliveries through much of the decade.
Steven Udvar-Hazy, executive chairman of Air Lease, which has more than 300 jets worth $21bn (£17bn) on order from Boeing and Airbus, said not a single plane was received on time in the first quarter and that supply chain issues will weigh on both firms for years to come.
He said that the aviation industry is afflicted by “too little supply and super-high demand with no means of resolution on the horizon”.
Mr Udvar-Hazy added: “We do not see a realistic way of changing this over the short to medium term. In fact, these imbalances are very likely to stay with us for at least three to four years in the future.”
Air Lease’s customers include many of the world’s major airlines, from discounters EasyJet and Wizz Air through to British Airways, Air France and Gulf giant Emirates.
Sash Tusa, an analyst at Agency Partners, warned the manufacturing crunch at Boeing risked higher fares for airline passengers.
He said: “Four years is a long time, but given where Boeing is right now with its inability to increase production of the 737 it’s not an unreasonable estimate.
“This is economics 101, supply and demand. Airlines are going to do two things; cut back on their low-yielding routes and then push up prices across the rest of their networks.”
Boeing was plunged into crisis in January after a door panel blew out of a 737 Max 9 plane mid-flight. According to an initial investigation by the National Transportation Safety Board (NTSB), four bolts that were meant to lock the panel to the plane’s fuselage were missing.
Following the incident in January, Boeing said: “Safety is our top priority, and we deeply regret the impact this event has had on our customers and their passengers.”
In March, Dave Calhoun, Boeing’s chief executive, announced that he would step down by the end of the year over its safety and financial woes.
Ryanair boss Michael O’Leary has already warned that passengers face price hikes in Europe this summer amid a capacity squeeze.
The discount airline expects to be short of the equivalent of 10 737 Max aircraft for the July travel peak after Boeing slowed deliveries.
Rival Wizz has been forced to ground 45 Airbus jets in order to have their Pratt & Whitney engines replaced following the detection of a manufacturing flaw with the GTF turbine.
The rebound in traffic since Covid has seen aircraft flying fuller, and Mr Udvar-Hazy said load factors already above 80pc are likely to reach record levels at many carriers as people cram on to existing fleets.
John Plueger, chief executive of Air Lease, said that the commercial aircraft market “is as tight as we have ever seen it in our history in this business”.
Neither are new aircraft models likely to bring relief for passengers. Mr Udvar-Hazy said there was little likelihood of Embraer, the world’s third-biggest plane maker, breaking into the Boeing-Airbus duopoly in the near future, though the Brazilian company has said it’s studying options for a new passenger model.
He said: “If someone wants to build a new generation aircraft we certainly will evaluate those products. But they’re also going to be faced with the same supply chain issues.”
Any new narrow-body airliner would also require new engine technology to achieve the required increments in operating efficiency, something that is not likely to be available until beyond 2030, he said.
The Chinese-built C919 aircraft already provides an alternative to the 737 Max and A320neo, but orders so far have come almost wholly from airlines within China.
The model has yet to be certified by regulators in Europe and the US, and a sales tour has focused on Asian nations including Vietnam, Laos, Cambodia and Malaysia.
