The voracious postpandemic demand for flying doesn’t show signs of cooling soon, according to aviation executives who gathered at this week’s Paris Air Show. They point to recent large aircraft orders such as Indian budget carrier IndiGo’s record 500-jet deal earlier this week.
“There is economic slowdown, but airlines do not see a slowdown of bookings,” said Guillaume Faury, chief executive of Airbus, the world’s biggest commercial jet maker. “And they continue to see a very strong demand with high prices.”
That demand has collided with the industry’s limited ability to quickly increase production of planes. Airbus and rival Boeing have faced constraints on the supply of things like engines, chips and workers. Both have long order backlogs.
Airlines have recognized these constraints and are scrambling to reserve planes, even though they won’t be delivered for years to come.
“We cannot make planes fast enough to satisfy the demand,” Faury said, in an interview at the company’s temporary air-show office near the runway of a small airfield here northeast of Paris. An airplane order these days is “a reservation of slots in the backlog, indeed for a resource that is scarce,” he said.
IndiGo’s jets, for instance, aren’t scheduled for delivery until 2030 at the earliest.
Boeing CEO David Calhoun, at a press conference before the air show, said he doesn’t see his company’s supply chain stabilizing until the end of next year.
“Why are people ordering airplanes out into the ’30s now? Because they see the same thing,” Calhoun said.
The aviation industry is notorious for its booms and busts, but the cycle these past few years has been extraordinary. Flying all but stopped during parts of the pandemic.
When travel restrictions started falling away last year, airlines were taken by surprise by the pent-up demand. Airports were overwhelmed last summer. Airlines struggled to hire back staff and bring planes back into service.
In recent months, many carriers have pivoted from recovery mode to growth mode. IndiGo placed its record order for 500 Airbus narrow-body A320-family jets to build out its domestic network and expand its international flying. Air India briefly held the record order title with a February deal for 470 planes split between Airbus and Boeing.
Earlier this year, two Saudi Arabian airlines said they would buy almost 80 Boeing 787 Dreamliners, the company’s biggest plane, as part of a broader plan to boost travel to the oil-rich kingdom.
Late last year, United Airlines ordered 100 Boeing wide-bodies. Last month, Europe’s biggest carrier, no-frills Ryanair, ordered up to 300 Boeing 737 MAXs.
“We’ve had some really, really big orders,” Boeing commercial chief Stan Deal said at a press conference in Paris before the show. “You’re seeing the wide-body market pick up and very strong demand there.”
So far this year, airlines and airplane lessors have ordered 1,429 Airbus and Boeing jets, including firm deals announced this week. That is already more than the combined full-year order haul of 1,377 in 2019. Confirmed orders at this year’s air show were the highest they have been since 2011, according to aerospace research firm Agency Partners.
The 737 MAX competes with the A320 in the hottest segment of the commercial aviation market. These narrow-bodies typically fly shorter flights with fewer people. That market has rebounded ahead of longer-haul travel.
Just before the pandemic hit, Boeing suffered two fatal MAX crashes, triggering a long grounding and regulatory review that hobbled it in the competition with its European rival.
Airbus, meanwhile, pushed aggressively during the pandemic to deliver its planes to customers—many of whom didn’t want them anymore. The European plane maker also worked closely with suppliers to keep assembly lines running, betting demand would bounce back quickly.
That bet paid off, allowing Airbus to tilt what is one of the world’s best-known business duopolies heavily in its favor. It surpassed Boeing as the biggest airplane manufacturer by both annual deliveries and total backlog in 2019.
For years, Boeing and Airbus had a roughly 50-50 split of global orders for single-aisle planes, both plane makers’ most profitable jets. Today, Airbus has about 62% of that market, according to a Wall Street Journal analysis of both companies’ orders and backlogs, including announcements made at the show this week.
Faury, in the interview, said Airbus’s dominance in the narrow-body market is “likely to last for long.”
He said he expects the single-aisle market to be dominated by Airbus and Boeing for the foreseeable future, but said he was taking China’s new homemade jetliner, the C919, seriously.
“By the end of the decade it’s not unlikely that they will have a significant share in China,” Faury said. “How they will perform compared to the international market I think it’s very difficult to say now. But we are humble, we don’t want to [have] too much complacency on what the Chinese can do.”
Boeing’s Calhoun, who didn’t attend this year’s air show, has said it isn’t as important for Boeing to regain its 50% share of the narrow-body market as it is for it to recover from its production issues.
“Most of the share losses that have occurred over the last four years, which are the ones that are really measurable, are because we couldn’t deliver airplanes,” he said at a preshow press conference in South Carolina, where Boeing produces its wide-body 787 Dreamliner. “And we still have a hangover from not being able to deliver airplanes.”
Even before IndiGo’s order, Airbus had been mostly sold out of its A320 narrow-body until the beginning of the next decade. Airbus is targeting a production rate of 75 A320-family models a month by 2026, after cutting production to around 40 a month during the pandemic. It has pushed its output goals back several times as it battles to overcome supply-chain issues.
Boeing, meanwhile, has set its sights on reaching a monthly production rate of 38 for its rival 737 MAX jets, up from 31. It should hit that target “pretty soon,” said Deal, Boeing’s commercial chief. The company plans to increase rates further but hasn’t yet set a specific target beyond that.
Boeing is still ahead in the market for bigger jets.
“The wide-body business is a different situation. It’s a fierce competition,” Faury said. “The backlogs are much shorter, there is capacity available much earlier, and for those years there is a tough competition and both sides trying to win the campaigns and dominate.”
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