The global aviation industry may see a turnaround in the next two to three years with negative impacts of Covid-19 being mitigated and economy recovering faster than expected, particularly in emerging countries.
In the Middle East, passenger traffic and the region’s commercial fleet are projected to more than double over a 20-year forecast period, aerospace giant Boeing said at a recent media event.
Middle East commercial jet and services market will be valued at more than $1.4tn, aerospace giant Boeing said in a forecast of 20-year demand for commercial airplanes and services.
In its 2021 Commercial Market Outlook (CMO), the Chicago-based Boeing said airlines in the Middle East will require some 3,000 new airplanes valued at $700bn and aftermarket services such as maintenance and repair worth $740bn, with the region positioned to capitalise on the recovery of regional and international travel and cargo demand.
Commercial fleet in the Middle East is expected to more than double to serve passenger and cargo demand and the projected wide-body deliveries will be the highest proportion of any region at 44%.
“The Middle East region’s role as a global connecting hub continues to be important for developing markets to and from Southeast Asia, China and Africa,” said Randy Heisey, Boeing managing director (Commercial Marketing) for the Middle East at a virtual media event.
Air freight represents an ongoing area of opportunity for Middle East airlines, with the freighter fleet projected to nearly double from 80 airplanes in 2019 to 150 by 2040.
Notably, air cargo traffic flown by Middle East carriers has increased since 2020 by nearly 20%, with two of the world’s top-five cargo carriers based in the region, Boeing said.
That said, the recent supply-chain delays and components shortages are spilling over into the aviation market, making it difficult and more costly for leading planemakers like Boeing and Airbus to get hold of certain parts. This comes as demand for commercial planes is surging, and could put the airline industry’s recovery at risk.
So far, the aerospace industry has avoided component shortages, largely because Boeing and Airbus are making fewer planes in view of the dwindling demand induced by the Covid-19 pandemic.
But as the world slowly gets a handle on pandemic mitigation, the demand for narrow-body jets is now surging, leading to shortages of semiconductor chips, plastics, and other materials used to build planes.
Indeed, rising costs and shipping delays are significant challenges for the global aviation industry. The sector is beginning to recover from the pandemic, but it is still facing a huge turbulence.
Analysts say the overall weak demand makes it tougher for equipment makers and suppliers to pass along increased costs.
In the first half of 2021, aviation companies paid between 27% and 44% more for raw materials compared to a year earlier, according to Meg Richardson, who specialises in markets, technology, and personal finance.
The industry is also facing shortages of skilled workers, which hurts production. To meet expected production increases next year and beyond, aviation companies need more staff.
Undoubtedly, the global shipping and supply chain disruptions are making it harder for corporate planemakers and suppliers to meet resurgent demand for parts.
Disruptions, which are also hitting commercial aviation, are beginning to drive up costs and risk slowing down the aerospace industry's recovery from the Covid-19 pandemic, a Reuters dispatch showed.
With private aviation traffic surpassing 2019 levels this year, some corporate planemakers and suppliers at a flagship business jet show in Las Vegas this month flagged warning signs about supply chain and labour hiccups.
Their comments added to recent concerns expressed by Airbus chief executive Guillaume Faury about mounting pressure on commercial aerospace's supply chain.
Aerospace has, so far, avoided the scale of supply woes faced by auto makers and machinery companies as planemakers Boeing and Airbus are producing fewer jets than before the pandemic.
But supply chain strains are increasingly becoming visible for the production of narrow-body jets, which have seen a pick-up in demand due to a recovery in short-haul trips, noted Eric Bernardini, global co-head of aerospace, defence and aviation at consultants AlixPartners.
Easing travel restrictions and the lure of private flights have led to an unexpected surge in business jet traffic, filling seats for private operators and expanding order backlogs for planemakers, but straining supply of jets, parts and pilots.
Aviation experts, however, do not expect air traffic to fully recover until at least 2026. This means, the industry has some time left to manage logistical bottlenecks.
For now, the aviation industry appears to be taking supply-chain hiccups in stride, as Richardson put it. But if Boeing and Airbus decide it is time to begin producing more jets again, they could well come up against some major constraints.