Airbus and Boeing's problems spell bad news for the cost of your summer vacation

09.04.2024 - 14:11 / insider.com / Willie Walsh / Dave Calhoun / Airlines

You can expect to pay more for plane tickets this summer, as airline capacity struggles to keep up with demand.

In December 2023, the International Air Travel Association predicted 2024 would break records for the most air passengers ever. It expects 4.7 billion people to travel this year — 200 million more than the pre-pandemic high set in 2019.

But airlines are warning they'll have fewer seats available than they initially thought, as both Boeing and Airbus are dealing with problems.

IATA had predicted a 9% growth in capacity. But passenger airlines will see 19% fewer aircraft than expected this year, Martha Neubauer, a senior associate at AeroDynamic Advisor, told Reuters.

Southwest Airlines has paused hiring because it now expects to receive 46 new Boeing 737 Max jets, down from 79.

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And the CEO of Europe's biggest budget airline, Ryanair, warned its ticket prices could go up 10% due to Boeing delivery delays.

Additionally, United has asked pilots to take an unpaid leave in May to help mitigate delayed deliveries of Boeing planes.

Boeing has had a bad year as the Alaska Airlines blowout in January sparked increased scrutiny from regulators. The Federal Aviation Administration has limited how many 737 Max jets it can manufacture.

And since CEO Dave Calhoun announced he would resign at the end of the year, Boeing's new chairman is trying to win back customers' trust.

While Boeing has been under the spotlight, Airbus also has some problems of its own.

A flaw in the Pratt & Whitney engines used on Airbus A320neos will ground 650 jets for inspections in the first half of this year.

IATA also predicted that airline profits would be up 10% from last year. But the trade group's director general, Willie Walsh, said the average airline only makes $5.45 for every passenger.

"That's about enough to buy a basic grande latte at a London Starbucks," he added. "But it is far too little to build a future that is resilient to shocks for a critical global industry."