Report Sees Challenges And Investment Opportunities For Airlines
Air travel could become less affordable and with fewer options for passengers as the industry supply chain issues continue to affect capacity, but technology can help airlines become more resilient in uncertain times, a global management consulting company predicts.
Bain & Company has issued a new report, Navigating the Next Decade of Air Travel, ahead of the Paris Air Show, which says that global air travel surpassed pre-pandemic levels in 2024, and global revenue passenger kilometers (RPKs) are forecast to grow at a compound annual rate of 4.7% through 2030, if economic growth stabilizes and supply keeps pace. But the report also found that delivery shortfalls, maintenance delays and rising trade tensions are straining the system. It said aircraft deliveries in 2023 and 2024 fell more than 30% below demand, forcing airlines to extend the life of aging jets.
“Aircraft production and maintenance continue to lag far behind demand,” the report added. “Legacy fleets are operating years past their intended retirement as new aircraft deliveries fall short of targets.”
Airbus and Boeing expanded their fleets by just 4.7% in 2024, well below the 6.8% needed to meet global demand and enable normal retirement rates. Meanwhile, deferred maintenance and parts shortages have pushed average turnaround times for geared turbofan engines to more than 250 days—up from 140 days before the pandemic.
“Deferred maintenance, reliability issues with newer engines, and persistent parts shortages have sharply increased backlogs and doubled turnaround times,” the report said. “Critical raw materials are in short supply … the industry suffers from ongoing acute skilled labor shortages.”
Trade friction is adding to the strain. “Tariff uncertainty is creating near-term volatility in airline demand and exacerbating supply chain problems,” the report explained.
These pressures are expected to hit both operators and passengers. “The result of these added costs will be rising prices, longer wait times, and more aircraft stuck on the ground,” Bain said. “Airlines will offer fewer routes, operate fuller planes, and face higher aircraft and maintenance costs. Overall, air travel could become less accessible in terms of both availability and affordability.”
Despite the headwinds, some players stand to gain. “Low-cost carriers remain best positioned for long-term share gain in an environment in which cost pressure increases and demand shifts toward shorter-haul domestic and leisure travel, especially in Europe,” the report noted.
The report recommends several actions: “Airlines should pressure-test fleet plans against a range of delivery delays and trade scenarios” and “invest in supply chain resilience and talent.”
In a one-on-one interview with ATW, Bain & Co. partner Geoffrey Weston, one of the report’s authors, said resilience and uncertainty were key factors for airlines to deal with.
“From an operational point of view, what you are clearly seeing is more extreme weather patterns, so when you look at what airlines have to deal with; the frequency of storms and other weather effects is just scientifically increasing quite rapidly,” Weston said.
“It’s very much to do with operations but it also immediately links with how you deal with customers, which is particularly interesting with the revamped EU261 [EU air passenger rights regulation] that’s both harder and softer; it’s very much a mixed bag.”
On the supply chain crisis, Weston said in many ways this was an “old news story,” but the problem is that it remains “still very current news and very much a problem that is not distributed in an even way—the truth is, it is having a much bigger effect on some airlines while some airlines are having zero impact.”
A vital question for airlines, Weston said, was, “What do you invest in?” Do airlines choose to buy more aircraft or to hold on to their cash? Resilience is key, but it is also expensive to make happen.
“You can invest in more spares, more standby crews, more land space to accommodate people in the terminal, or you can invest in new systems to make boarding faster or work with security agencies to see more security screening machines are in place,” he said.
Weston also pointed to the questions airlines are facing about whether to invest in artificial intelligence (AI) and how to use it. “We believe at Bain that there are lots of different and interesting examples of AI. It makes everything a little bit faster and more efficient.”
Investment decisions are harder to make for small- and medium-sized airlines, Weston added, saying that this was why scale has become important and why states that allow supplier consolidation should also be more pro-airline consolidation. “It matters even more for airlines to bulk up,” he said.
AI can also help airlines better understand changing customer and loyalty program member needs better. Weston explained that AI systems can create a “synthetic customer” based on segments of passenger types and the synthetic customer can then be asked about its preferences.
“All departments of an airline can have access to this and so they can use AI to find out what each passenger wants,” he said.
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