Air Ticket Prices Won't Go Down & Even Go Up Because...
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One stark reality is beginning to emerge: there are far too few aeroplanes in the world. As travel picks up again and even China removes the last Covid curbs, this is becoming more and more apparent.
Boeing Co. and Airbus SE are prancing around about big deals as carriers from United Airlines Holdings Inc. to Air India Ltd. put or look to place jet orders that number in the hundreds.
However, because of supply chain issues, it may be years before those planes are delivered. According to Jefferies LLC, there are currently 12,720 aircraft on order.
All of this indicates that the exorbitant airfares, about which many have loudly complained over the past few months, are here to stay and that things can become worse before they get better.
According to LiveFromALounge.com creator Ajay Awtaney, "People got used to lower fares during the pandemic..."
"It's not simply a plane scarcity; there are other elements involved, including energy pricing."
While one well-funded airline in a given jurisdiction may have the resources to lower costs, doing so would probably make other carriers unprofitable in the long run, "resulting to even higher fares," according to Awtaney.
The most popular single-aisle models from the two large aircraft manufacturers, Boeing and Airbus, are completely sold out through at least 2029.
The demand from airlines is being exacerbated by supply chain issues, including labour shortages and the difficulty in obtaining critical components as carriers attempt to update their older fleets.
Airbus earlier this month abandoned its plan to deliver 700 aircraft this year due to supply-chain concerns, and the company has already issued warnings that rising energy prices will be especially difficult on smaller, more power-intensive producers like those that make castings and forgings.
Every plane delivered to one of the biggest lessors in the world for the past two years, according to Steve Udvar-Hazy, the founder of Air Lease Corp. and a legendary figure in aviation, has been late.
It doesn't matter if it's a 737 Max, 787, A330, or A350; we haven't received a single plane on schedule, he claimed.
"And the A321neo has been the worst. When comparing the contracted delivery month to the actual delivery month, we've experienced delays of up to six or seven months. It's a result of a mix of personnel shortage, rapid ramp-up, and supply chain problems. Production employees cannot work from home. So, it's been a major issue.
The shortfall is partly a result of the thousands of planes that carriers kept in deserts around the world, not knowing when demand would pick up after Covid other governments closed their borders.
Hundreds have not been reintroduced into fleets, either because they require heavy duty maintenance now that they have been idle for so long or because airlines intend to phase them out and haven't bothered scheduling them once more.
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