The Airline Supply Chain Is Getting Worse

Airlines Need New Planes, but the Supply Chain Has Other Ideas

The idea of a single-aisle plane filled with passengers and a single lavatory, with a bathroom attached to the cockpit, is a relatively new one (the first examples appeared in the mid-1980s, and many other early designs can be found in the Federal Aviation Agency’s Airplane and Wing Registry). Yet no sooner had the idea captured the public’s imagination than airlines started clamoring to get their hands on the planes. Now, as they struggle to maintain their planes and build enough money to keep them running, the airline industry is facing a new issue: A lack of new planes.

For years, the airlines have been able to buy planes on the market, but as planes get older and newer, the demand for new ones has been dropping. As a result, as American Airlines notes in its quarterly report, “The airline market in general has experienced a period of decline in passenger demand, which has been exacerbated by the ongoing cost-cutting measures implemented by the airlines.”

But the carriers’ biggest problem is not simply that they can’t get brand-new planes. It’s the fact that they don’t know exactly where to get their hands on the planes, and that the supply chain has many ideas of its own.

Let’s start with the airlines’ internal supply chains.

One of the most interesting developments in recent years is that the airlines have made a number of moves to try to create a more agile supply chain that can produce aircraft in a short period of time. One of the most popular moves has been to create a series of regional hubs around the world—essentially, smaller hubs where a few large carriers could use one hub to fly to many destinations in one direction and another hub to fly to many destinations in the other direction. The idea is that those regional hubs will not only be able to create one single aircraft for the region but that the single-aisle planes will be able to fly between destinations more quickly than if they were flying between them.

The problem with

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