A irlines traditionally avoid operating aircraft from multiple manufacturers: largely relying on a single type fleet. But with the current supply chain constraints expected to last until around 2029 or even beyond, and aircraft orders placed today likely to be delivered after 2030, a shift in fleet management strategy may be required.
The sheer complexity of operating aircraft sourced from multiple OEMs – coupled with enhanced costs – has convinced many airlines to avoid a dual source fleet strategy.
Airline Economics+ airline analyst team lead Chris Broad commented: “Training pilots and engineers and maintaining spare parts and engineering tooling for both manufacturers’ products is complex and costly.”
“Airlines are certainly tempted to explore diversifying their OEMs given the ongoing supply chain challenges,” said Alton Aviation Consultancy managing director Denis Hogan. “However, it’s not a straightforward decision and depends on factors such as the airline’s current OEM, its operational model, and immediate fleet needs.”
Hogan added: “With substantial order backlogs and supply chain issues affecting the entire industry, switching or diversifying OEMs will take significant lead times and carries operational risks.” He added that the current supply chain issues “may lead some airlines to give more weight to the risks of relying on a single OEM”, but that decision would still have to be weighed against the additional complexities such a strategy presents.
Delivery delays have weighed on airlines’ capacity growth – particularly airlines dependent on Boeing aircraft as the US manufacturer contends with a growing list of obstacles.
Ryanair CEO Michael O’Leary has voiced his displeasure over the Boeing delivery delays. The airline reported in its second quarter 2024 earnings results that operating costs climbed 11% over the same period last year, citing the Boeing delays, coupled with growing labour costs, as a main driver to this increase.
Ryanair said it had 156 737-8200 ‘gamechangers’ – essentially a 737 MAX with Ryanair’s 200-seat configuration – in its fleet at the end of June 2024. “That is 20 aircraft [fewer] than we had originally budgeted,” said O’Leary.
He added that the company will have less capacity for this December than originally scheduled due to the delays. With this, O’Leary said the company experienced two years of “essentially no capacity growth at all”.
He continued: “We get very modest compensation [for the Boeing delivery delays], mostly in the form of maintenance and other credit. “Our focus has been getting those deliveries before the end of July, so we at least have the maximum number of aircraft available for August. But the compensation we receive will not reflect the significant loss we’re suffering as a result of being 20 aircraft short.”
Ryanair said in the call it was supposed to take seven aircraft in July from Boeing but was reduced to five. Boeing delivery reports confirm it received five 737 MAX aircraft. O’Leary said the two aircraft were pushed back to the following month. However, it was originally supposed to receive 10 aircraft in August.
“That’s now down to 8% and probably heading towards 7%,” said O’Leary on the aircraft deliveries for August. Delivery reports show that Boeing deliveries totalled only six aircraft.
While the airline typically relies on Boeing aircraft, Ryanair extended operating leases on three A320s with Lauda to compensate for the delays.
The outspoken low-cost carrier boss told media outside the Ryanair offices on September 11, 2024, that the company is “still struggling with delays from Boeing”, claiming it to has “hampered” its traffic and capacity growth for the year. He added that the impact will carry through to next year.
“We are hopeful of getting 50 aircraft this winter or before peak summer 2025,” added O’Leary.
With Boeing factory workers in Seattle striking after rejecting a 25% and subsequent 30% pay offer, O’Leary said in an interview with Ireland’s Newstalk that an extended strike could further exacerbate the delays and further hinder its growth plans.
Boeing’s contentions with regulatory bodies and ongoing quality control issues, along with the catalyst of the Flight 1282 incident, have been well-documented throughout this year. While Airbus has largely escaped the mainstream headlines, it is no stranger to the supply chain issues reverberating through the industry.
“We are shooting at moving targets here,” Wizz Air CEO Joszef Varadi said at a press conference in London when asked by Airline Economics about deliveries for the remainder of the year. “We are at the mercy of Airbus and what they can deliver [and] that number keeps changing all the time.”
Wizz Air is targeting 500 aircraft in its fleet by 2030. However, at the event, Varadi said that target could slip back a year or two as a result of delays from Airbus.
In addition, the new fleet in service has faced quality control issues. Wizz said at the event that around 20% of its fleet was grounded consequently of the GTF engine issues. As a result, it has wet leased an equivalent amount to maintain its capacity and hold in the market.
“Maybe the best way to put this is that we are expecting for summer 2025 to be operating roughly a 15% larger fleet than what we have today,” continued Varadi. “Some of it will be new deliveries, some of it will be old aircraft return, and some of it is potential engine regains
and reintroductions.”
He added that the company “got the pricing right” when it placed its order for the A321XLR, which will enter into service with the airline in March, flying from Milan to Abu Dhabi. He added: “Airbus can price this airplane [the A321XLR] in the way they want because of scarcity of supply and availability.”
Despite the delays, however, the airlines have remained loyal to their respective aircraft supplier.
“Boeing are still making great aircraft,” O’Leary added in his interview with Newstalk. Equally, Wizz Air has expressed enthusiasm about the market possibilities afforded by the extended range of the XLR.
Operational efficiencies aside, Airline Economics+ Chris Broad added that “the discounts available when placing a single source large purchase” offer an added incentive and benefit to remaining loyal to a single OEM.
Loyalty aside, the supply chain constraints, the uncertainty surrounding delivery schedules, issues with some newly in-service aircraft, and growing lease rates, have shown the limitations of relying on a single OEM. This has “tempted some airlines to consider dual source,” continued Broad, “possibly hedging their bets or not having all their eggs in one basket.”
One such airline that has leaned into a dual fleet structure is Pegasus Airlines, which operates a fleet of both 737s and A320 family aircraft. At an event in London in June, Pegasus’ vice chairperson of the board Mehmet Nane said: “We are one of the rare LCCs that is able to manage that dual fleet structure.”
“For LLCs, which prioritise simplicity and efficiency, adopting a dual OEM strategy is typically not viable,” commented Hogan. “The traditional LCC model is built around fleet commonality to reduce costs.”
Pegasus is in the process of selecting its next order as it looks to expand for 2029. With its dual fleet structure, the airline can consider both Airbus and Boeing options.
Neighbouring carrier Turkish Airlines seems to share a similar sentiment, placing an order for A321neos and A350s at the end of last year, with the airline also expecting to finalise an order for 737 MAXs and 787s as a direct comparison to the Airbus order. At a closed media event during Farnborough International Airshow 2024, Turkish Airlines chairman Ahmet Bolat said: “We are utilising all opportunities to get rid of this delivery problem. We are trying everything to mitigate the delivery risks.”
A diversified OEM source is not a short-term fix with limited slot availability and delivery delays. Rather, it has to be adopted by airlines as a long-term strategy.
Furthermore, an airline has to have the scale to justify a transition towards a dual fleet source. Hogan said: “Sufficient scale together with strong financial and operational management, a dual OEM strategy might be feasible and even desirable to achieve the benefits of competition.”
With the challenges and complexities presented by dual source fleets to low-cost carriers, Hogan said Alton does not “foresee a widespread shift away from the single-type model among LCCs in the near future”.
In more recent news, Alaska Airlines finalised its acquisition of Hawaiian Airlines on September 18, 2024. Alaska had largely operated a fleet of 737 aircraft, along with its regional subsidiary Horizon Air operating some 44 E175 aircraft under a separate air operator certificate (AOC).
With the $1.9bn acquisition closed, Alaska will incorporate Hawaiian’s mixed fleet of A330s, A321neos, 787s, and 717s. The investor presentation from December 2023 said Hawaiian’s 717 fleet has “nearly half its cycle time remaining and could eventually be replaced by 737” aircraft. Hawaiian will retain its brand, but the Alaska has requested for a combined AOC from the Federal Aviation Administration (FAA). Alaska said Hawaiian’s mostly owned fleet will provide it with flexibility as it looks to expand its presence in domestic and international markets.
The company said the combined fleet “optimises optionality and strategic opportunities”. Alaska has a firm order of 72 737s and Hawaiian has a firm order for 10 787-9s.
Fitch Ratings, in its assessment, said: “Integrating the companies will introduce operational complexity to Alaska’s business model, which historically has been based around maintaining simplicity and a single fleet type... Hawaiian’s long- haul international network is new for Alaska. Despite these complexities, Fitch believes management’s integration track record mitigates operational and execution risks.”
It remains to be seen whether Alaska will eventually transition Hawaiian’s fleet to Boeing aircraft or will maintain the diverse aircraft type and OEM. A spokesperson for Alaska said it would reveal its fleet plans “down the road”, adding that “there’s still plenty of work to be done”.
Pursuing this plan would provide it with greater leverage over the aircraft availability strains and put it on par with some of the larger US airlines, such as Delta Air Lines and American Airlines, which operate Airbus and Boeing fleets – continuing to place orders with both OEMs.
In Europe, KLM – a traditionally Boeing airline – invested €7bn into its fleet renewal programme, replacing its older 737s with A321neo aircraft. In addition, the airline is adding five new 787-10s followed by A350s to replace its older 777s and A330s. Air France-KLM placed an order for 100 A320neo family aircraft – with purchase rights for an additional 60 – in 2021.
A spokesperson for KLM said that while Airbus deliveries have been on schedule, it is facing some delays from 787 delays. The spokesperson commented: “Indeed, ‘dual sourcing’ has potential benefits circumventing these issues.” However, KLM “primarily” examines the performance of an aircraft in the selection process.
Icelandair placed an order for 13 A321XLR aircraft in 2023 and will also operate four leased A321LR aircraft, with deliveries expected sometime next year. This will build upon its fleet of 737s, meaning it will operate a mixed OEM fleet from next year. Other airlines include Virgin Atlantic, which now operates a mixed widebody fleet of A330s and 787s, as well as Jet2 which started as a Boeing airline operator. Jet2 has introduced the A321 and has A320neo family aircraft on order. However, the airline is in a period of fleet transition to an all-Airbus fleet.
Diversity in OEM sourcing could prove a hedge against potential future delays and other events. A costly and complicated undertaking that only a select number of airlines could realistically even consider – let alone carry out.
It would be unrealistic to imagine airlines suddenly opening their arms – and wallets – to multiple OEMs when even managing multiple aircraft types from the same manufacturer can pose challenges such as cockpit differentiation that can pose a barrier to pilots. But as the past few years have shown, black swan events are indiscriminate in their impact. Perhaps, then, we may see a growing number of airlines adopting such a strategy to remain ahead of any future turbulence.