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Istanbul based Turkish Airlines is set to announce an order of 600 aircrafts – 400 narrow-body and 200 wide-body – in June 2023.
MarketsandMarkets welcomes this development. Our editors share their views on this development and the potential impact it will likely have on the worlds’ aircraft industry.
Let us take a quick glance at both the players - Turkish Airlines and Air India - who are reshaping the aerospace world with record breaking aircraft orders - one confirmed and one upcoming in June 2023.
The Aerospace industry is being led with a lot of grit and courage by the top players in this business
Founded on 20 May 1933, its' current fleet size is 400 and operates to 340 destinations.
The company is led by Ahmet Bolat (Chairman of the board) and Bilal Ekşi (Deputy chairman, CEO).
With reported revenue of US$ 18.426 billion in 2022, has one of the strongest books with an operating income of US$ 3.193 billion reported in 2022 as against net income of US$ 2.725 billion.
It has a workforce of 40,264.
Overall, looking at all these numbers, Turkish Airlines seems to be in a sound financial position.
The significance of Turkish Airlines' order by itself is more than a celebratory one-time event. It follows a very recent world record breaking order of 470 aircrats by Delhi, India based and Tata group owned Air India.
Air India was founded in 15 October 1932; 90 years ago (as Tata Airlines)
The company is led by N. Chandrasekaran (Chairman) and Campbell Wilson (CEO & MD).
It's fleet size is 117 and it flies to 102 destinations.
With reported revenue of 1.65 billion USD in 2021, it had one of the weakest books with losses of 0.97 billion USD.
History being made in the worlds’ Aircraft Industry
Given the magnitude of the aircraft orders placed by Turkish Airlines and Air India, airlines worldwide will be watching closely for several key outcomes:
- Fleet Expansion and Renewal: These massive orders signal heavy investments expansion and modernization of their fleets. Other airlines will take note and may feel compelled to do the same to maintain competitiveness. Given the magnitude of the aircraft orders placed by Turkish Airlines and Air India, airlines worldwide will be watching closely for several key outcomes:
- Demand and Supply Dynamics: Such large orders could strain the manufacturing capacity of aircraft manufacturers, potentially leading to longer wait times for airlines placing new orders.
- Impact on the Secondary Market: As Turkish Airlines and Air India incorporate new planes into their fleets, they may retire older aircraft. This could increase supply in the secondary market for used aircraft, which could be of interest to smaller airlines or those in developing regions.
- Industry Confidence: Despite the differing financial situations of Turkish Airlines and Air India, the size of these orders suggests confidence in the airline industry's growth. This could encourage other airlines to make similar investments.
- Route Expansion: The large order of both small and large body aircraft by Turkish Airlines suggests a strategy to expand both its domestic/regional and long-haul operations. Other airlines might be prompted to reassess their own route strategies in response.
- Economic Implications: Given the economic boost these orders will provide to the aerospace industry, airlines may find that governments and financial institutions are more willing to support similar investments.
- Technological Innovations: With new aircraft typically featuring the latest in aviation technology and fuel efficiency, other airlines will be watching to see what benefits Turkish Airlines and Air India derive from their new fleets.
- Influence on Aircraft Manufacturers: With such significant orders, Turkish Airlines and Air India might influence future aircraft design and features, particularly if they have specific requirements for their new planes.
The key takeaway for the world's airlines from these orders is that there are immense potential benefits of substantial investment in fleet renewal and expansion
Industry wide Impact on Aircraft Communication Market
The Aircraft Communication Market is a segment of the aerospace industry that deals with technologies and services facilitating communication between the aircraft and the ground, as well as within the aircraft itself. The impact of Turkish Airlines and Air India's large aircraft orders on this market could be significant in the following ways:
- Increased Demand: With the placement of orders for over 1,070 new aircraft between them, Turkish Airlines and Air India are set to dramatically increase the demand for communication technologies. This could drive growth in the aircraft communication market as manufacturers and service providers work to meet the needs of these new aircraft.
- Advancement of Technology: Such large-scale orders could stimulate further innovation and development of advanced communication technologies, as both airlines will likely demand the latest and best communication equipment for their new aircraft. This could lead to advancements in technology that benefit the entire Aircraft Communication Market.
- Standardization of Communication Systems: The large orders may also lead to further standardization of communication systems. If a particular technology or system is chosen by these major airlines, it may become the industry standard, influencing the future direction of the Aircraft Communication Market.
- Financial Impact: Turkish Airlines, being in a sound financial position, might be more inclined to invest in premium, cutting-edge communication systems for their new fleet. This could positively impact the market. However, Air India's financial status might limit its ability to do the same, which could lead to a focus on more cost-efficient solutions.
- Regional Impact: These purchases will potentially have a major impact on the Aircraft Communication Market in the regions these airlines operate. In particular, this could stimulate the market in Europe (where Turkish Airlines is based) and in APAC (where Air India is based).
- Potential for Long-Term Contracts: Given the size of the orders, there's potential for long-term contracts for maintenance and upgrade of communication systems, which could provide steady revenue for companies in the Aircraft Communication Market.
Overall, the substantial aircraft orders by Turkish Airlines and Air India are set to have a significant impact on the Aircraft Communication Market, driving demand, potentially influencing technology standards, and shaping the market's growth in the coming years.
Impact on Aircraft Seating, Seat Upholstery, and Brake Systems
The large orders for new aircraft from Turkish Airlines and Air India are likely to have a significant impact on these 3 markets
Aircraft Seating Market: With 1,070 new aircraft on order, there will be a substantial increase in demand for aircraft seats. The financial positions of both airlines may also influence the type of seating they order. Turkish Airlines, being in a strong financial position, might opt for high-end, comfort-oriented seats, driving demand in the premium segment of the market. Conversely, Air India, given its financial struggles, might focus more on cost-effective seating solutions.
Seat Upholstery Market: Similar to the seating market, there will be a surge in demand for seat upholstery. Turkish Airlines' financial position could lead them to choose higher-quality, premium upholstery, potentially leading to growth in this segment of the market. Air India might go for more economical options due to its current financial standing, but the volume of their order will still contribute significantly to the demand.
Brake System Market: Every new aircraft will need a set of brake systems, creating a substantial increase in demand in this market. Both airlines may demand the latest and most advanced brake systems for safety and efficiency reasons, potentially driving innovation and development in the brake system market.
The large orders also indicate that both airlines are investing in updating their fleets, which may encourage other airlines to do the same to stay competitive. This could result in a broader increase in demand across these three markets.
Also, with such large orders, long-term maintenance contracts could be established, ensuring consistent demand in the replacement and maintenance market segment for seating, upholstery, and brake systems.
The scale of these orders is set to stimulate innovation as suppliers strive to secure contracts with these airlines by offering more advanced, efficient, or comfort-enhancing products.