Future_Commercial_Air_Travel_July_2024⁠↗

Productivity—always an issue—has also become a greater pain point. With most aerospace companies focusing on immediate supply chain and labor issues, few have explored long-term strategies for increasing efficiency. They now significantly lag behind other sectors in digitizing manual processes, and the gap widens each year. Operational excellence remains elusive, with many airframers and suppliers struggling to meet their commitments.

The aircraft order backlog is now so large that it would take 13 years to resolve, assuming 2023 delivery rates.1 The supplier landscape adds another layer of complication. OEMs have limited transparency when it comes to problems that affect vendors, and they often discover very late in the process that parts and components are unavailable or in short supply. OEM business models are now pushed to the limit, as companies grapple with short-term problems while also looking to invest for the long term. Capital expenditures are soaring, and companies have already made massive investments in production facilities and infrastructure. While some OEMs are seeking external partners to share costs, they are finding very few appropriate candidates. That said, companies in other industries have successfully navigated similar crises and increased production. For instance, semiconductor companies have increased capacity utilization to more than 95 percent to meet short-term demand.2 Now it’s time for aerospace OEMs to develop their own strategies.

One of the more pressing issues— and one frequently cited by commercial OEMs and suppliers—relates to persistent supply chain constraints. Our analysis shows that aerospace executives were about 18 times more likely to mention supply-chain-related terms, such as “shortages,” during earnings calls in 2022 than they were in 2014.

Although the average age of both narrow- and wide-body aircraft will decline over time, the opposite holds true for regional jets and turboprops. Their average age will increase because of a shortage of replacement aircraft and low production volumes.