Airline Economics Growth Frontiers Dublin 2025 once again kicked off the start of another new year, setting the tone for what lies ahead for the aviation industry.
Airline Economics Growth Frontiers Dublin 2025 opened with a positive welcome from Cirium Ascend Consultancy global head Rob Morris who claimed that “nothing can go wrong now” for 2025. The optimism was driven by strong supply, demand, and leasing environment for the industry.
“On the economic growth side, nothing can go wrong,” continued Morris. “On the passenger side, yields are down a little bit but that’s not going to impact demand globally.”
The positive news continued with a keynote speech from Air Lease Corporation (ALC) executive chairman Steven Udvar-Hazy. Hazy expects airline traffic will “grow and stabilise” this year, continuing a positive trend from last year. He also set out the “unprecedented” financing needs of the aviation industry that requires $600bn over the next six years to meet the growing demand for fleet renewal and expansion. He expects half of this financing to come from the leasing sector.
On the supply side, Morris questioned whether there really is a supply deficit: “The fleet is as big as it needs to be. The utilisation, the hours flown per day, per aircraft, is back to where it was in 2019, it doesn’t feel to me like the fleet is in deficit right now, but the market seems to think it is.”
He continued: “The fleet we have today is about 17,300 aircraft. And the fleet we need is 17,500 The deficit is 200 aircraft. It’s not fundamental. Analysis says the deficit is not as big as we think, and I think it could be relatively simply cured. The deficit is all about new aircraft. We don’t have enough new aircraft for various reasons and the older aircraft are curing the deficit right now. The deficit is about not enough new aircraft.”
During the manufacturer panel, Boeing vice president of commercial marketing Darren Hulst agreed with Morris, stating that the industry analysis of the industry being 4,000 aircraft short is “misconstrued” when taking into account the impact of the pandemic. “In reality, if there wasn’t a pandemic, the industry was set to produce 4,000 more airplanes than it has over the course of the last eight years,” he explained. “But did it need 4,000 more aircraft? Frankly, no it did not… I think we’re short somewhere in the neighbourhood of 1,500 and 1,800 aircraft. That 4,000 really translates to about half of that in terms of actual shortage.”
Aside from perceived aircraft shortages, engine issues were a key talking point for the day. The welldocumented inspections on the geared turbofan (GTF) engines resulting in aircraft on ground for several airlines. Both airBaltic and Wizz Air have faced particular hurdles as they manoeuvre the associated challenges.
Speaking in a fireside chat with Airline Economics+ vice president Chris Broad, airBaltic CEO Martin Gauss said of the engine issues: “We mitigated it in the first years by taking wet leases but we also grew at the same time; and the engine issue has not really changed over the years, which was different to what was expected.”
Similarly, in his own fireside chat with Hazy, Wizz CEO Jozsef Varadi said that the GTF engine issue has lasted longer than expected.
“At the beginning, we thought it would be around 18 months to maybe two years. It has become clear that it’s more like a four to five year issue.”
However, both Gauss and Varadi maintained that, when on-wing, the engine is a strong unit that performs well, providing fuel efficiency and lower emissions.
While pressing topics of engine issues and aircraft shortages were discussed heavily throughout the conference – coupled with lease rates and the financing of such assets – the topic of sustainability was also a key concern discussed across all panels.
“There is a real impact from aviation,” said SMBC Aviation Capital CEO Peter Barrett in a fireside chat with Stella Dimaraki deputy CFO at Aegean Airlines. “We’re not the biggest carbon footprint industry but we’re a significant one and we need to address it.” Barrett added that aviation was a force for good as an economic driver and it is essential that the industry “keeps doing that good work” in a more sustainable fashion.
During a panel dedicated to sustainability, Bird & Bird consultant and moderator for the discussion Paul Briggs said there was some disappointment with the speed in which the industry’s sustainability efforts have developed. He further noted that the theme for the panel and the industry overall is realism – “not pessimism and certainly never cynicism”, Briggs said, adding: “Each step in the right direction is a step in the right direction.”
With greater regulation coming into action, taxonomies, and carbon offsetting coming into play, the topic of sustainability is unavoidable even amongst issues that may appear more pressing to players in the industry.
While the term ‘ESG fatigue’ has begun to materialise amongst the aviation industry, the reality is, as Briggs says, “this issue is not going away.” Panellists during the conference that a key driver for net zero 2050 is sustainable aviation fuels (SAF). While Aviation Capital Group (ACG) executive leader in investor relations & ESG Gordon Grant noted that “cash flow is a problem” for SAF projects, but hopes that this will turn in 2025, adding that his company will continue investing in SAF to drive change.
Grant added that ACG’s oversubscribed sustainability-linked loan closed in the third quarter of last year was evidence to the fact that, “there’s a lot of banks and lenders out there that are focussed on loans like this, which is a positive for us.”
Ryanair head of sustainability and finance Thomas Fowler said during the panel that the airline’s the key components of its decarbonisation strategy are investing in SAF, as well as in new technology, fuel-efficient, lowemissions aircraft and engines.
“It’s not an airline problem, it’s not a banking problem; we all have to come collectively to work together on this issue,” said Fowler. “That’s the only way it’s going to work.”
To hear from our panellists in greater depth on these topics and more, access the member dashboard via the Airline Economics website.