Some investors could expect the global jet market to dwindle as the globe prepares for Omicron. Not at all.
The business has resumed as airlines seek out greener passenger and freight planes that they hope will offer them an advantage in the post-pandemic rebound, which is being fueled by anticipated travel demand as well as the continuous rise of internet shopping.
From Arizona to Amsterdam, some of the industry's most astute purchasers are seeking efficient jets for the second half of the decade, hoping to avoid huge waitlists that they believe would stymie their development and environmental goals.
With a tentative agreement to replace its cargo fleet with Airbus' new A350 lightweight freighter offering, Singapore Airlines kicked off a trio of key decisions expected in the following days.
Air France-KLM and Australia's Qantas are set to make modest passenger jet purchases soon.
"People are thinking about long-term fleet strategies, particularly ESG (environmental, social, and governance)," said Rob Morris, Ascend by Cirium's worldwide head of consultancy.
"It's a case of 'Am I going to get left behind if I don't think about my replacement cycle now?'" he continued.
After a previous, much larger order boom that was losing steam as the pandemic struck havoc, Airbus and Boeing are sold out on benchmark medium-haul aircraft until mid-decade.
However, with such long lead periods, until aircraft can be delivered, the attention is now shifting to the second half of the decade and a push to get ahead of the future capacity backlog.
"It's a buyer's market right now, and it's a terrific time to buy," said aviation consultant Brendan Sobie.
Last month, at the Dubai Airshow, two industry heavyweights, Air Lease Corp Executive Chairman Steven Udvar-Hazy, and a stable of airlines led by Indigo Partners founder Bill Franke placed orders for over 300 jets.
'FEEDING FRENZY' is a phrase that means 'feeding frenzy.'
Some were skeptical, citing the usefulness of such events in terms of public relations. Others, though, believe the delivery dates indicate a preemptive strike.
"It should go without saying that environmental, social, and governance (ESG) factors will be crucial throughout this cycle. People are scared that they will not be able to get enough slots, therefore there is a bit of a feeding frenzy going on "Morris stated his opinion.
Not everyone is eager for additional capacity. Singapore Airlines canceled certain passenger aircraft orders while placing orders for new freighters. Asia is projected to be one of the most difficult places to recover from.
Despite this, combined gross orders for Airbus and Boeing jets more than tripled to 1,439 in the first 11 months of this year, compared to pandemic-depressed levels a year ago, boosted in part by a rise in demand for the Boeing 737 MAX after it was authorized to fly following a safety prohibition.
That number is roughly 200 greater than it was at the same stage in 2018, the final year of data before the MAX crisis.
Whether or not investors who bet on new jets win depends on a number of factors that are difficult to predict. Analysts warn that they include worldwide travel demand, China's strict border restrictions, and the impact of the Omicron variety.
Any delay in restoring China's vast market beyond the fourth quarter of next year, according to Eamonn Brennan, director general of air traffic control organization Eurocontrol, may postpone the entire aviation recovery by a year.
RISKS OF THE GREEN WAVE
As the industry aspires to achieve a target of net-zero emissions by 2050, planemakers are touting emissions savings of 15% compared to most earlier models. In the short term, the industry is reliant on energy companies to produce more environmentally friendly fuel.
As he participated in the Indigo Partners order in Dubai, Frontier Airlines CEO Barry Biffle emphasized the benefits of locking in those savings now rather than waiting until 2050.
However, some aviation industries may face additional risks as a result of a hypothetical green order wave.
The combination of pent-up demand from the epidemic and investor and customer pressure to reduce emissions - particularly in Europe - might force the previous generation out of service sooner than projected, upsetting industry economics.
That would be good news for manufacturers who rely on new product sales, but it would be bad news for leasing and engine companies, whose revenues are spread out over the life of a plane.
When the dust settles from the epidemic, Olivier Andries, the head of French engine maker Safran, told reporters earlier this month that the average retirement age of single-aisle planes might fall to 20 or more years from 23 years.