# Analysis-Jet orders boom as airlines fear shortage Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-12 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Turkish Airlines Orders 600 Jets Amid Global Shortage Fears Meta Description: As airlines rush to secure new jets amid a looming shortage, Turkish Airlines plans to order 600 planes in a bold move to become a global aviation hub. URL: https://financedigest.com/analysis-jet-orders-boom-as-airlines-fear-shortagehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-12t104633z1lynxmpej4b0ctrtroptp4airbus-boeing-orders-1736814020262-compressed.jpg) # Analysis-Jet orders boom as airlines fear shortage By Tim Hepher PARIS (Reuters) – Planemakers can’t build them but airlines can’t stop buying them. Even as they wrestle with industrial problems preventing the delivery of jets sold before the pandemic, Airbus and Boeing are totting up billions of dollars of new orders stretching beyond 2030 amid a rebound in air travel. From Air India to Ireland’s Ryanair and a new national airline in [Saudi Arabia](https://www.financedigest.com/saudi-arabias-king-crown-prince-send-condolences-on-queen-elizabeths-death.html "Saudi Arabia’s king, crown prince send condolences on Queen Elizabeth’s death"), a handful of carriers have placed firm or provisional orders for 700 jets. Turkish Airlines’ surprise announcement on Thursday that it plans to order 600 jets in June spells what would be the fourth mega-deal in a few months – upstaging Air India’s record order for 470 [Airbus and Boeing](https://www.financedigest.com/boeing-airbus-executives-urge-delay-in-u-s-5g-wireless-deployment.html "Boeing, Airbus executives urge delay in U.S. 5G wireless deployment") jetliners. Turkey’s national champion last month announced a 10-year strategic plan including a goal of 170 [million passengers](https://www.financedigest.com/ryanair-passenger-numbers-rise-in-august-to-11-1-million.html "Ryanair passenger numbers rise in August to 11.1 million") by 2033, compared to over 85 million in 2023. They are aspiring to [build a mega-connector airline from everywhere in Europe to everywhere in Asia and Africa,”](https://www.financedigest.com/cricket-fiery-stokes-revives-england-but-s-africa-build-good-lead.html "Cricket-Fiery Stokes revives England but S Africa build good lead") said Rob Morris, head of global consultancy at UK-based Ascend by Cirium. That would intensify a battle for connecting traffic between [Istanbul’s hub and rival centres](https://www.financedigest.com/ukraine-grain-export-coordination-centre-opens-in-istanbul.html "Ukraine grain export coordination centre opens in Istanbul") in Europe and the Middle East. The [announcement surprised many in the industry](https://www.financedigest.com/gumgum-announces-industry-first-contextual-partnership-with-tumblr.html "GumGum Announces Industry First Contextual Partnership with Tumblr"), however. U.S. [industry analyst Richard Aboulafia highlighted its timing – days before Turkey’s May 14 elections – and noted the weight simultaneously being given to strategic](https://www.financedigest.com/anti-snoring-devices-and-snoring-surgery-market-strategic-analysis-to-understand-the-competitive-outlook-of-the-industry-2024.html "Anti-snoring Devices and Snoring Surgery Market Strategic Analysis to Understand the Competitive Outlook of the Industry, 2024") aerospace projects including a fighter, attack helicopter and drones. And now this [plan to make Turkey an airline centre](https://www.financedigest.com/samsung-elec-breaks-ground-on-new-chip-rd-centre-plans-15-billion-investment-by-2028.html "Samsung Elec breaks ground on new chip R&D centre, plans billion investment by 2028") of the world too. The timing looks almost too coincidental,” Aboulafia, [managing director](https://www.financedigest.com/hybrid-theory-promotes-ines-martins-to-global-head-of-product-names-sean-badlishah-managing-director-of-apac-region.html "HYBRID THEORY PROMOTES INÊS MARTINS TO GLOBAL HEAD OF PRODUCT; NAMES SEAN BADLISHAH MANAGING DIRECTOR OF APAC REGION.") of Aerodynamic Advisory, said. An order of such magnitude could also become swept up in broader political topics such as discussions over Turkey’s objection to Sweden [joining NATO](https://www.financedigest.com/finland-will-join-nato-on-tuesday-stoltenberg.html "Finland will join NATO on Tuesday – Stoltenberg"), Jefferies analysts cautioned. Regardless of the scope or timing, however, analysts said Turkish Airlines’ announcement marked a strong statement of intent as carriers that survived the pandemic fight for [market share without waiting for global](https://www.financedigest.com/global-frozen-mackerel-market-to-surpass-us-1-05-bn-by-2031.html "Global Frozen Mackerel Market to surpass US$ 1.05 Bn by 2031") supply chains to stabilise. ## OVERLAPPING DEMAND Istanbul, where President Tayyip Erdogan opened a new $12 billion airport in 2018, is seen by many as a geographically efficient location to challenge major hubs in Dubai and Doha. Chairman Ahmet Bolat said Turkish Airlines would [order 200 long-haul jets and 400 smaller narrow-bodies needed](https://www.financedigest.com/money-orders-vs-checks-what-you-need-to-know-as-a-consumer.html "Money Orders vs Checks: What You Need to Know as a Consumer") to feed such traffic. The airline’s fleet is roughly split between [Airbus and Boeing](https://www.financedigest.com/biman-bangladesh-to-buy-10-airbus-jets-breaking-boeing-reliance-minister.html "Biman Bangladesh to buy 10 Airbus jets, breaking Boeing reliance – minister"). Pressure to act was highlighted by Ryanair, whose boss admitted this week to [paying more than in the past to secure dwindling supplies of narrow-bodies later](https://www.financedigest.com/cost-of-living-crisis-prompts-buy-now-pay-later-warning-from-uks-fca.html "Cost-of-living crisis prompts ‘buy now, pay later’ warning from UK’s FCA") this decade. Airlines are getting worried about future new aircraft availability and so are perhaps getting spooked into ordering early,” Morris said. The risk, a senior [industry source warned](https://www.financedigest.com/uk-consumer-industries-warn-curbing-energy-support-will-hit-demand.html "UK consumer industries warn curbing energy support will hit demand"), is that multiple airlines are buying planes to try to serve the same travel demand. The resulting overhang could trim profits more broadly. It’s a civil [arms race](https://www.financedigest.com/quantum-computing-in-finance-the-next-digital-arms-race.html "Quantum Computing in Finance: The Next Digital Arms Race?"). Everyone is [buying the same planes for the same people – who knows](https://www.financedigest.com/weighing-up-buy-now-pay-later-what-you-need-to-know-before-you-invest.html "Weighing up Buy Now, Pay Later: What you need to know before you invest") who is going to win? Probably no-one,” the source said. As well as being the world’s sixth largest pre-COVID tourist destination, Turkey already competes with Gulf majors Emirates, [Qatar Airways](https://www.financedigest.com/finnair-partners-with-qatar-airways-in-search-of-new-routes.html "Finnair partners with Qatar Airways in search of new routes") and Etihad for transit traffic. Riyadh Air joined the super-connector race with a [major Boeing order](https://www.financedigest.com/ryanair-places-major-boeing-order-after-jet-price-spat.html "Ryanair places major Boeing order after jet price spat") in March. Locking in jets so far ahead also involves a gamble on inflation, with escalation clauses potentially adding billions to the [value of a large order](https://www.financedigest.com/deliveroo-reports-doubling-in-gross-order-value-in-first-half.html "Deliveroo reports doubling in gross order value in first half") by the time planes are delivered from the end of this decade. Only airlines with strict control of costs or strong [political support](https://www.financedigest.com/uk-financial-watchdog-urges-political-support-for-crypto-bans.html "UK financial watchdog urges political support for crypto bans") can afford such exposure, experts said. The boom also comes at a time when airlines face growing pressure to [cut emissions](https://www.financedigest.com/british-funds-tell-texas-emission-cut-vows-matter-for-our-reputation.html "British funds tell Texas: emission-cut vows matter for our reputation"). Critics [say ordering planes so far ahead](https://www.financedigest.com/ab-foods-says-primark-trading-ahead-of-expectations.html "AB Foods says Primark trading ahead of expectations") risks diverting attention from a new generation of single-aisle jets, which are expected to become available from the mid- to late 2030s. Planemakers say currently sold jets are already [significantly cleaner than the ones they replace](https://www.financedigest.com/meal-replacement-shakes-market-to-partake-significant-development-during-2020-2030.html "Meal Replacement Shakes Market to Partake Significant Development During 2020-2030 ") and therefore maximise the benefit from new fuels that are seen as the industry’s best hope of meeting net-zero targets in 2050. But some strategists also see an effort by fast-growing airlines to bring forward purchases of current-generation jets in anticipation of a shortage leading up to [technology change](https://www.financedigest.com/how-technology-is-changing-the-game-in-construction.html "How Technology is Changing the Game in Construction"). The [industry will argue this is part of their net-zero strategy](https://www.financedigest.com/global-compressor-controllers-market-outlook-2021-pricing-strategy-industry-latest-news-research-report-analysis-and-share-by-forecast-2028.html "Global Compressor Controllers Market Outlook 2021, Pricing Strategy, Industry Latest News, Research Report Analysis And Share By Forecast 2028") because they are efficient aircraft. But they will still be in service in 2050, so that would put a limit on fuel [improvements from now to then,” a senior industry](https://www.financedigest.com/plan-to-improve-german-rail-transport-may-worsen-congestion-industry-warns.html "Plan to improve German rail transport may worsen congestion, industry warns") adviser said. (Reporting by Tim Hepher; Editing by Mark Potter) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---