Aircraft shortages lead Gulf carriers to brace for disruption

via Reuters

The global aviation sector is in turmoil. Dominated by Boeing and Airbus, the aircraft industry is beset by supply chain disruptions affecting nearly every airline, including those in the Gulf region.

Kelly Ortberg, Boeing’s chief executive, is battling headwinds on multiple fronts. The company’s dire 2024 financial results, released on January 28, underscore the urgent need for a turnaround strategy.

The US aircraft manufacturer reported a loss of $11.8 billion, worse even than the loss of $2.2 billion in 2023. Production delays, union disputes and Senate committee hearings probing the company’s safety culture have all contributed to the company’s ongoing woes.

Nevertheless, the worldwide aviation crisis is being fuelled by problems across the entire industry.

Boeing’s 787 Dreamliner’s Rolls-Royce Trent engines have been blighted by performance issues, while Airbus-operated carriers, particularly those using Pratt & Whitney engines, are battling engine unreliability. 

Amid all this disruption, aircraft deliveries are frequently delayed.

Major legacy airlines in the region typically operate a mix of Airbus and Boeing aircraft. This is a common strategy which provides operational and commercial flexibility.

In contrast, low-cost carriers prioritise operational simplicity, favouring single-fleet models. In the Middle East, FlyDubai remains fully committed to Boeing, while FlyNAS, Air Arabia and Flyadeal rely solely on Airbus. 

However, even Airbus-operated airlines are not immune to challenges – between them, 13 aircraft are currently grounded for maintenance, reflecting the broader strain on the industry.

These delivery delays affect airlines and ripple through the entire industry

The aircraft delivery challenges have coincided with a slowdown in global travel demand. The post-pandemic surge in “revenge spending” and travel is fading in many markets, although the impact has been less pronounced in the Middle East.

Airlines are struggling to expand their networks and, in some cases, have had to cut routes or reduce frequencies because of aircraft shortages. British Airways’ dropping of Abu Dhabi and Kuwait is a prime example.

These delivery delays affect airlines and ripple through the entire industry. Many aircraft are leased from specialist finance companies, which have already lined up new operators for planes that should have been returned in the last two years.

With the supply of second-hand aircraft drying up in 2024, lease rates have soared to record highs, increasing operating costs.

Major Middle East airlines have placed long-term orders with Boeing and Airbus for aircraft deliveries spanning the next five years or more.

However, many of these deliveries are not aimed at fleet expansion but rather at replacing older, less fuel-efficient, and more carbon-intensive aircraft. Additionally, delivery schedules remain uncertain and are likely to be adjusted multiple times.

The table below outlines projected aircraft orders, but not all deliveries will necessarily increase fleet capacity.

Boeing is scheduled to deliver just 17 aircraft to major regional airlines in 2025, indicating that deliveries have already been pushed further back. The Boeing 777X, for which Emirates has an adjusted order of 126 aircraft, is now not expected to enter commercial service until 2026, based on the latest reports.

Given Boeing’s struggles, it is hard to believe that all 156 aircraft ordered by Emirates and FlyDubai will arrive on schedule by the end of the decade. 

For Airbus, the challenge lies in meeting its own targets. While its CEO remains confident, past experience suggests that some deliveries are likely to slip by a year or so.

Among Middle Eastern carriers, Air Arabia is the most exposed in terms of total Airbus aircraft orders. However, with a fleet of A320s, which are produced comparatively smoothly, it should be in a relatively comfortable position.

Meanwhile, Emirates has finally begun receiving its A350s, easing pressure on its network and allowing for new route additions in 2025. However, securing all 47 A350s by the end of 2026 looks uncertain.

In aviation, it’s never wise to say never, but the current aircraft delivery schedules for 2025 are unlikely to go as planned. Boeing and Airbus are expected to under-deliver, and those anticipating delays will not be disappointed.

As a result, airlines in the region will be forced to maintain capacity discipline, by limiting network expansion and keeping supply tight. The outcome? High airfares across the board in 2025 and beyond.

John Grant is partner at UK consultancy Midas Aviation