How the crisis at Boeing could make your next vacation more expensive

How the crisis at Boeing could make your next vacation more expensive - Business and Finance - News

Boeing’s Production Woes Cause Airline Industry-Wide Shortage of Planes, Resulting in Higher Ticket Prices

The ongoing production issues at Boeing are creating ripples throughout the airline industry, making it increasingly difficult for carriers to meet surging travel demand and driving up the prospect of even higher ticket prices.

Impact on Major Carriers

During a recent interview with News Finder, Ryanair CEO Michael O’Leary revealed the extent of the issue, explaining that his airline had anticipated receiving 57 Boeing planes this summer but now expects to receive between 35 and 40 instead. Southwest in the United States, which exclusively flies Boeing 737 planes, announced last week that it would receive 40% fewer jets than anticipated this year.

Global Impact of Plane Shortages

The shortage is not limited to Boeing; about 600 Airbus jets worldwide have been grounded due to an issue with engines made by US aerospace manufacturer Pratt & Whitney. This is affecting contact carrier Lufthansa, which has more than 30 Airbus A320Neos currently grounded.

Rising Fare Prices as a Result

O’Leary went on to explain that the industry-wide shortage of planes will significantly impact fare prices. He predicts that air fares in Europe will increase between 5 and 10% this summer due to the supply shortage.

Long-Term Impact on Air Fares

Analyst Robert Mann from R.W. Mann & Company believes that US domestic air fares will remain elevated through 2024, despite a decline last year after May. According to data from Airlines Reporting Corporation, US domestic air fares have risen by 5-6% compared to the same period last year, surpassing overall inflation.

Limited Options for Airlines

The global order backlog for commercial aircraft has exceeded 15,700, and last year, airlines placed 3,850 new orders – the highest number since data collection began in 2010. However, planemakers only delivered 1,265 aircraft, a mere 11% increase compared to the previous year.

Boeing’s Production Slows Down

Boeing announced this week that it had slowed production of its 737 Max jets following an in-flight incident where a part of the fuselage blew out, leaving a large hole. The US aviation regulator has yet to certify the Max 10 for passenger safety, posing challenges for carriers such as Ryanair that have placed large orders for this aircraft.

Airline Switching to Alternatives

United Airlines is turning away from Boeing and considering alternatives, such as Airbus planes. However, switching planemakers poses challenges due to the long lead time in aircraft orders and the need for pilots trained on specific aircraft types. Airbus has an order backlog of approximately 8,600 commercial aircraft, making it a less viable option for some airlines.

contact Planemaker’s Production Challenges

Airbus is also facing production challenges, as it produces fewer planes than before due to pandemic-related supply chain disruptions. Despite these challenges, the airline industry continues to face unprecedented demand, with an estimated 4.7 billion passengers expected to travel by plane this year – an historic high that surpasses the 4.5 billion recorded in 2019.

Supply and Demand: The New Normal

With limited options for airlines and both Boeing and Airbus struggling to meet demand, the aviation industry is facing a long-term challenge. Industry consultant Richard Aboulafia predicts that “the reduction in high fares we were hoping to see doesn’t happen, and instead, we will probably see a reversal across the board and centered in the Atlantic.” The future of air travel appears to be defined by tight capacity and higher ticket prices.