Airlines Anticipate Shortage, Triggering Jet Order Boom

Airbus and Boeing, two leading aircraft producers, are facing difficulties keeping up with the surging demand for new jets as airlines eagerly continue to purchase aircraft. Despite obstacles stemming from the pandemic, both companies have amassed billions of dollars’ worth of new orders, extending well into the 2030s, propelled by the ongoing recovery of the air travel industry.

Several airlines, including Air India, Ryanair, and a newly established national carrier in Saudi Arabia, have placed firm or provisional orders for a total of 700 jets from Airbus and Boeing.

Adding to the momentum, Turkish Airlines recently made a surprise announcement, revealing plans to order 600 jets in June. This deal marks the fourth major agreement in just a few months, surpassing Air India’s record-breaking order for 470 Airbus and Boeing aircraft.

Industry experts note that Turkey’s national carrier aims to position itself as a mega-connector airline, linking Europe, Asia, and Africa. This strategic move intensifies competition for connecting traffic between Istanbul’s hub and other major centers in Europe and the Middle East.

While the timing of the announcement, just days before Turkey’s elections, raised eyebrows, analysts also highlighted the simultaneous emphasis on strategic aerospace projects, including fighters, attack helicopters, and drones.

The magnitude of such an order may become entangled in broader political discussions, caution Jefferies analysts, citing Turkey’s objection to Sweden joining NATO.

Despite potential political implications, analysts view Turkish Airlines’ announcement as a robust statement of intent. Airlines are taking proactive steps to regain market share in the post-pandemic era, showing a willingness to act without waiting for global supply chains to stabilize.

With its newly inaugurated $12 billion airport, Istanbul is considered a geographically advantageous location to challenge major hubs in Dubai and Doha.

According to Turkish Airlines Chairman Ahmet Bolat, the order will include 200 long-haul jets and 400 smaller narrow-body aircraft to accommodate the anticipated traffic. The airline’s current fleet is split between Airbus and Boeing aircraft.

The pressure to act promptly is evident, as Ryanair’s CEO recently admitted to paying higher prices to secure narrow-body aircraft later in the decade due to limited supply.

However, concerns have been raised regarding multiple airlines purchasing planes to cater to the same travel demand, potentially leading to an oversupply that could impact industry profits.

Placing orders years in advance also carries the risk of inflation, with escalation clauses potentially increasing the value of large orders by the time the planes are delivered. Only airlines with strict cost controls or strong political support can afford such exposure.

This surge in orders occurs at a time when airlines face mounting pressure to reduce emissions. Critics argue that ordering current-generation planes years ahead could divert attention from the development of the next generation of single-aisle jets, expected to be available in the mid- to late-2030s.

Planemakers counter that the currently sold jets already offer significantly improved fuel efficiency compared to their predecessors, leveraging the benefits of new fuels crucial for achieving the industry’s net-zero targets by 2050.

However, some strategists interpret the current order surge as an effort by rapidly expanding airlines to advance their purchases of current-generation jets, anticipating a shortage leading up to technological advancements.

While the industry argues that this aligns with their net-zero strategies due to the efficiency of the aircraft, critics emphasize that these planes will still be in service in 2050, limiting the scope for fuel improvements in the interim.