Airline Economics magazine - Issue 83

CAUTIOUS OPTIMISM

As we close out the year, I’ve had the privilege of speaking with many of the aviation industry’s top executives for the Aviation Leaders interview series, conducted in partnership with KPMG, and those that have contributed to our Finance & Leasing and Aero Engine Guides. These conversations also set the stage for the upcoming Growth Frontiers Dublin conference in January.

Despite a world marked by heightened geopolitical instability, inflationary pressures, trade wars, tariffs, and a generally weaker economic outlook, there remains a strong undercurrent of optimism for the future of air travel in 2025. However, this optimism comes with cautious notes from risk-aware executives who have learned tough lessons during the pandemic recovery and in dealing with the fallout from the trapped Russian-leased fleet.

Looking ahead to 2025, a relatively benign fuel price environment, coupled with stable and slowly falling interest rates, is bolstering airline forecasts for the year ahead. This positive outlook extends into Q1, with aircraft leasing executives particularly upbeat. They enter the new year supported by rising lease rates, robust residual values, and continued high demand, as new aircraft production remains constrained.

On the manufacturer side, optimism is more tempered. While production rates are still low and delivery schedules continue to slip, Boeing is cautiously ramping up its production lines, and Airbus is working hard to meet its delivery commitments. That said, both manufacturers remain dependent on their suppliers of engines, seats, and other key components, which are grappling with their own delays. Engine manufacturers, however, have reported that issues with new equipment are starting to ease, with the GTF “fix” progressing as planned. Still, the general consensus within the industry is that many of these challenges will persist through the remainder of the decade.

The traditional aviation economic cycle is being further complicated by supply chain disruptions, which require more experience and agility to navigate.

This year’s Aviation Legends series features seven industry stalwarts who have weathered their fair share of black swan events and recovery periods. We are deeply grateful to them for sharing their career journeys with us in this issue. We look forward to celebrating their achievements, along with the winners of our Aviation 100 and Deals of the Year awards, at the Aviation 100 gala dinner in Dublin.