Two leaders of the global aviation industry highlighted the impact of global supply chain issues at the ongoing Qatar Economic Forum.
Supply constraints in the airline industry could drag on for more than half a decade, delaying deliveries to airlines and hampering the industry’s rebound from the Covid-19 pandemic, Boeing Company president and CEO David L Calhoun said.
Qatar Airways Group Chief Executive HE Akbar al-Baker said that along with delays of new jet deliveries, supply constraints are also a hurdle for existing fleets, forcing airlines to ground some planes that need spare parts for everything from engines to avionics.
“This is all the consequence of the Covid-19 pandemic,” al- Baker noted.
Calhoun said: “I can see supply constraints for a very long time. We have backlogs that go out five to six years so if the backlogs would suggest supply constraints that far, that means it’s even further.”
Calhoun noted it could take until the end of 2024 to iron out sector-wide supply chain problems that have hampered global jetliner production.
"Priority one for the two airplane manufacturers is stability," Calhoun said and noted: “We have to resolve the supply chain issues and the surprise associated with it; and we have to resolve it sort of once and for all.”
"That is not a short-term job. It sounds like it might be, but I think it could take all of this year and probably all of next year."
Calhoun's latest projection on the speed of recovery in the supply chain echoes comments by Airbus chief executive officer Guillaume Faury, who recently said that production would regain pre-pandemic levels at the end of 2024 or even in 2025.
Despite the overall pattern of disruption, Calhoun said he did not think recent manufacturing problems with the best-selling 737 narrow-body jet would defer those production schedules for more than "maybe a month or a month and a half".
Obviously, the aviation industry requires a wide range of components and parts to maintain and repair aircraft. Supply chain disruptions, such as delays or shortages in the production or delivery of these items, lead to grounded aircraft and extended maintenance periods, affecting flight schedules and overall operational efficiency.
Supply chain disruptions result in increased costs for airlines. These disruptions cause price fluctuations in raw materials, components, and fuel.
Additionally, airlines incur additional expenses to expedite shipments, find alternative suppliers, or manage inventory disruptions. Such cost increases put financial strain on airlines, potentially leading to higher ticket prices for passengers.
Industry analysts say the manufacturing of aircraft involves a complex supply chain network spanning multiple countries and suppliers.
Any disruption within this network, such as delays in the delivery of critical components, cause delays in aircraft production. This impact airlines' fleet expansion plans, their ability to retire older aircraft, and overall fleet optimisation.
Timely maintenance and repair are crucial for aircraft safety and operational reliability. Supply chain issues lead to difficulties in sourcing the required spare parts, equipment, and qualified technicians.
Extended downtime for maintenance or limited access to essential resources obviously reduce the availability of aircraft, impacting airlines' ability to meet their flight schedules.
Supply chain disruptions also affect the overall service quality provided by airlines. For example, delays in catering services or the availability of in-flight amenities result in a diminished customer experience. In turn, this impacts customer satisfaction, loyalty, and the airline's reputation in the industry.
When supply chain disruptions occur, analysts say there is a higher risk of airlines resorting to alternative or unfamiliar suppliers to fulfil their needs. This increases the possibility of acquiring counterfeit or substandard parts, which can compromise the safety and reliability of aircraft systems. Ensuring the authenticity and quality of components becomes challenging during such disruptions.
The aviation industry operates on a global scale, with airlines relying on international suppliers and logistics networks. Supply chain issues, such as trade disputes, customs regulations, or geopolitical tensions, disrupt the flow of goods and services across borders.
These disruptions then lead to operational inefficiencies and difficulties in coordinating international operations.
Addressing these supply chain challenges requires collaboration and proactive measures from airlines, manufacturers, suppliers, and regulatory bodies.
Improved contingency planning, diversified sourcing strategies, robust inventory management, and enhanced communication and co-ordination among stakeholders are essential to mitigate the impact of supply chain issues on the aviation industry.
