Airlines Need New Planes, but the Supply Chain Has Other Ideas
“Do you know which airplane you’re flying?”
It’s the phrase used by commercial pilots to get a passenger to listen to their training. And it’s also a refrain that reverberates through the industry as it seeks to reengineer an industry that has been deeply reshaped by competition, technology and competition.
But while that phrase may have been true in the past, the reality today is that the demand for air travel has actually decreased in the past few years. Passenger traffic fell 4.3% in 2016, the first time in almost 13 years that passenger traffic has declined.
“With the trend towards longer, profitable flights and fewer cancellations,” says David Adams, an analyst with Atmosphere Research Group, “we may see passenger growth pick up towards the end of the decade.”
But the industry is grappling with whether to bring planes into the supply chain, a trend that has been under the radar. The industry has made it clear that it doesn’t want to be in the business of buying planes and buying pilots, for now. But as an industry that doesn’t buy planes and doesn’t buy pilots, how does the airline business even get a plane that works?
But that’s where the idea comes in, because the supply chain has another idea.
“The industry as a whole is doing everything it can to reduce costs,” says Adam Bair, an analyst with IHS Markit. “They’re trying to get better at that and they don’t have an aircraft that is better for this.”
Bair thinks airlines could sell aircraft at a lower cost when the technology was at a point where it was easier to sell a commercial airliner with a human onboard. Bair notes that new, more efficient commercial jets are at the forefront of the industry’s efforts to reengineer itself. In the same way, the industry is looking to outsource the