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Why Airlines Continue Ordering More Aircraft Despite Excess Capacity

Why Airlines Continue Ordering More Aircraft Despite Excess Capacity
In January, Alaska Airlines made headlines with its largest-ever aircraft order, committing to purchase 110 jets from Boeing. This includes 105 Boeing 737-10 narrowbodies and five Boeing 787 widebodies, bringing Alaska’s total Boeing 737-10 order book to 245 aircraft, with options for an additional 35. While airlines often attribute such large purchases to sustained growth and strategic planning, Alaska Airlines highlighted a more pressing concern: securing critical delivery slots amid a market where waiting times for new aircraft now extend beyond a decade.
Production Backlogs and Supply Chain Challenges
The urgency behind these orders stems from unprecedented production backlogs. The International Air Transport Association (IATA) reports that Boeing and Airbus collectively face a backlog of approximately 17,000 aircraft—equivalent to nearly 60% of the current global fleet, a significant increase from the historical average of 30 to 40%. At current production rates, it could take up to 12 years to clear this queue, assuming no further disruptions. Delivery shortfalls have already reached at least 5,300 aircraft as of December, underscoring the strategic necessity for airlines to place early orders to modernize or expand their fleets.
This supply-demand imbalance is largely driven by persistent supply chain constraints, with engine shortages posing a particularly acute challenge. United Airlines CEO Scott Kirby has publicly criticized manufacturers for their reliance on single engine suppliers, a vulnerability that contributed to United’s cancellation of its Airbus A350 order. Similarly, Qantas has experienced delays in receiving its A350-1000s due to comparable supply chain issues. Even as Boeing and Airbus increase airframe production, many completed jets remain grounded, awaiting engine deliveries.
The situation is further exacerbated by shortages of skilled labor and the overall fragility of the aerospace supply chain, which continues to be vulnerable amid ongoing economic uncertainties. IATA projects that these constraints are unlikely to ease before 2031 to 2034, compelling airlines to plan and place orders years in advance to secure future capacity.
Industry Responses and Strategic Adjustments
Despite these challenges, some manufacturers are successfully increasing output. Embraer, for instance, is ramping up deliveries with a target of producing 330 aircraft annually by the end of the decade. Meanwhile, low-cost carriers are adapting their strategies to address excess capacity and evolving market conditions. Spirit Airlines, having struggled with oversized aircraft, is now focusing on smaller planes to access a broader range of markets. Allegiant’s acquisition of Sun Country and its cautious approach to capacity growth further illustrate the industry’s efforts to navigate these complexities.
In this environment, airlines are compelled to place large aircraft orders well in advance—not solely to support growth but to ensure access to the planes they will require when delivery slots become available. This dynamic creates a paradox: despite excess capacity in the market, the risk of missing out on future deliveries drives airlines to continue ordering more aircraft.

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