Aviation is facing a crisis of supply and demand. While, post-pandemic, demand has bounced back – to all-time highs in some cases – the industry is struggling to keep pace thanks to severe shortages in supply.
A number of serious manufacturing faults in certain aircraft, combined with a crippling strike, has led to production delays at Boeing, for example, while supply chain disruptions around the world have also slowed aircraft production. The International Air Transport Association (IATA) estimate for total deliveries in 2024 is 1,250 – 30 per cent below what was forecast a year ago.
It’s also drastically less than the peak of 2018, when more than 1,800 aircraft were delivered by the two main original equipment manufacturers, Airbus and Boeing. The 2025 forecast has been revised down from around 2,300 to 1,800 and comes with the caveat that further cuts could and should be expected.
Marina Efthymiou, professor of aviation management at Dublin City University, says the aviation industry is facing a significant supply chain crisis, with delays impacting all big manufacturers. To address the challenges, critical shifts in strategy are under way; these include considering alternative manufacturers.
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“This situation has revealed systemic vulnerabilities, particularly the sector’s structural dependence on a just-in-time manufacturing philosophy,” says Efthymiou. “The crisis has also highlighted the industry’s over-reliance on the Boeing-Airbus duopoly, prompting leasing companies to explore diversification opportunities by considering aircraft from emerging manufacturers such as Embraer and Comac.”
She explains that while concerns about operational compatibility and market acceptance persist, this diversification could reduce the impact of future supply disruptions. However, it also introduces new risks, including uncertainties over residual values and less-developed aftermarket support networks. In this context, Comac’s C919 is positioning itself as a potential alternative, particularly for narrow-body aircraft.
“Although its operations are currently limited mostly to China, Comac is actively pursuing international certification and expanding its customer base,” says Efthymiou. “Notably, VietJet Air has wet-leased [where the aircraft and crew are provided] two Comac ARJ21 (C909) aircraft from Chengdu Airlines, while Brazil’s Linhas Aéreas is considering the C919 for its fleet.”
If these trends continue, Efthymiou believes the aviation market could ultimately evolve into a “triopoly” in the coming years. Additionally, there is speculation about whether Chinese-backed lessors will favour Comac, further accelerating its global acceptance.
According to Joe O’Mara, head of aviation and tax partner at KPMG in Ireland, there are other knock-on effects. He says the current supply-demand imbalance continues to favour large-scale lessors.
“Lease rates, driven on a lag basis by interest rates and in real-time by the demand environment, have continued to rise for all types of assets, as airlines fret on their ability to access lift,” explains O’Mara. “This has also been reflected in lease extensions, with very high extension rates and some airlines looking to engage more than two years out from the end of the lease. With asset values materially increasing, we have seen trading activity increase substantially.”
The upshot is that smaller lessors are losing out. “This means a challenge for those lessors that are not at scale as, with the manufacturer order books sold out for many years and the sale and leaseback environment remaining a very competitive space, those looking to grow face narrow paths.”
Efthymoiu notes that while lease extensions provide short-term revenue stability for lessors, this raises questions about the long-term sustainability of operating older fleets. But with delays in new aircraft deliveries, the secondary market for midlife and older aircraft has gained prominence.
“Lessors are increasingly acquiring and redeploying used aircraft, albeit at reduced yields,” she explains. “This approach prioritises near-term capacity needs but carries risks, particularly if airlines eventually shift focus to newer, more fuel-efficient models for long-term operational efficiency.”
Manufacturers are also prioritising deliveries for key customers, often placing lessors in a weaker negotiating position compared to major airlines.
“Nonetheless, lessors are leveraging their influence to advocate for more transparent and flexible production schedules, seeking to balance the power dynamic and ensure a more sustainable supply chain moving forward.”
