By Allison Lampert, Conor Humphries and Tim Hepher

MONTREAL/DUBLIN (Reuters) – The second-hand marketplace for airplanes is booming attributable to a power scarcity that has continued because the pandemic – and fears are rising that Boeing (NYSE:)’s newest disaster may tighten the squeeze in coming months.

The trade is already some 3,000 planes wanting what it deliberate pre-COVID attributable to pandemic disruption and different bottlenecks at Boeing and Airbus, leasing agency Avolon says.

Now, curbs on Boeing manufacturing within the wake of a mid-air blowout add to pressures forcing airways to fly older planes for longer – from engine shortages to produce chains and an abrupt snapback in journey in lots of elements of the world.

“It simply compounds the availability scarcity and it pushes again the date once we might return to a balanced market,” mentioned analyst George Dimitroff of the aviation analytics firm Cirium, who sees strains till at the least 2027.

Carriers are paying greater costs to make sure they’ve a sufficiently big fleet to maintain up with demand, which airways group IATA expects to achieve a document 4.7 billion passengers in 2024.

The availability crunch has been a sizzling subject at a serious assembly in Dublin, residence to most of the prime lessors, this week.

“We have seen a powerful enhance in values due to the scarcity of recent equipment,” Aengus Kelly, mentioned CEO of AerCap, the world’s largest dealer and lessor of plane.

In a break from standard patterns, some airways are shopping for the planes that they had been renting somewhat than negotiating lease extensions, he mentioned on the sidelines of the Airline Economics convention.

That is an indication that “airways know that the problems that we have now are usually not going to get solved anytime quickly,” he added.

Greater than half of the worldwide passenger fleet is lessor-owned. Rental costs for these jets have been rising properly earlier than the Jan. 5 panel blowout that led to a curb on Boeing’s manufacturing.

Typical lease charges for a 10-year-old Boeing 737-800, which preceded the MAX, have been round $220,000 per thirty days in January 2024, up from $183,000 in January 2023 and $156,000 in 2022, Cirium mentioned.

Present 737-800 leasing payments are nonetheless 5% under January 2020 ranges, however Cirium mentioned that ought to change by finish of March.

Boeing hoped to extend manufacturing for its MAX household of plane after a years-long disaster stemming from crashes in 2018 and 2019. However the panel blowout on an Alaska Airways flight has added regulatory oversight anticipated to sluggish manufacturing development.

MAINTENANCE EFFORTS

The common age of an airline-owned passenger airplane was 16 years in 2024, up from 14 in 2019, Cirium mentioned. Planes are usually used for 25 years, however can fly longer and are simply as protected as new plane if correctly maintained, consultants say.

“Airways, lessors (are) making the choice to put money into the upkeep of older plane to maintain these older plane going for one more 4 or 5 years,” Avolon CEO Andy Cronin mentioned.

“We’re seeing way more of that exercise within the form of older a part of our portfolio than we might have anticipated.”

Whereas delays in new airplane deliveries have damage airways and lessors ready for brand spanking new planes, the demand for older tools opens a doubtlessly profitable path for these with older fleets.

In the meantime, upkeep companies stand to profit from the larger use of older planes which notch up extra store visits. However labor shortages imply the queue for these repairs is longer.

Engines are in particularly brief provide due to restore capability issues at RTX’s Pratt & Whitney. Producers have raised costs on new engines, lowering the inducement to modify to newer tools as quickly as potential.

The squeeze on passengers jets is a headache for air cargo, which transports a 3rd of the world’s commerce by worth.

Sometimes, passenger jets are finally transformed to freight transport or damaged up for elements. However Robert Convey, senior vice chairman at Florida-based Aeronautical Engineers, mentioned companies anticipate finding fewer passenger planes to transform.

Extending the lifetime of older, much less fuel-efficient planes might also enhance environmental stress on an trade that has touted its efforts to generate web zero emissions by 2050.

Business officers mentioned manufacturing setbacks will not derail these objectives, however environmentalists disagree.

“There may be an over-reliance on new so-called ‘extra environment friendly’ plane know-how however no plans to cease including extra polluting planes to the sky,” mentioned Jo Dardenne, aviation director at Brussels-based Transport & Atmosphere.