The global plane shortage

Strong demand and constraints in supply. Estimated reading time: 13 minutes

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Source: Unsplash

Last weekend, I came across this chart showing that global flight activity is already above pre-COVID levels:

Source: AMP

I’ve also found myself travelling more in the past few months. I’m probably not the only one.

Meanwhile, the well-regarded Fidelity Asian Values Fund has taken a stake in BOC Aviation － an aircraft leasing company. What are they seeing that the market doesn’t?

Source: Fidelity Asian Values Fund May 2023 monthly factsheet

I’ll try to figure out the answer in this post. Is travel demand now pushing lease rates and aircraft values higher? And who will be the main beneficiaries of this trend?

Table of contents
1. Travel demand is stronger than ever
2. Production remains capacity constrained
3. Supply & demand is getting tighter
4. CO2 ambitions increases demand
5. Investable universe of stocks
   5.1. Aircraft manufacturers
   5.2. Aircraft lessors
6. Conclusion

1. Travel demand is stronger than ever

The number of Google search queries for “flight tickets” globally has gone ballistic:

Source: Google Trends

Whether this is due to temporary revenge spending or a permanent shift in demand for travel is unclear. But people are certainly keen on travelling.