Middle East airlines fleet size to grow 2.1% up to 2026

Middle East airlines fleet size is projected to grow 2.1 per cent over the coming five years, slowed down by the Covid-19 pandemic.

According to a new report by research firm Oliver Wyman, fleet composition is shifting more towards the narrowbody segment during this period, driven by the large number of orders from budget carriers.

The slow recovery may mean fewer direct and less frequent routes — at least until the pandemic is under control and normal economic activity returns.

Over the next ten years, the fleet size of regional carriers is forecasted to reach more than 2,300 in 2031, after shrinking to its lowest point of under 400 aircrafts during the pandemic.

Fewer aircraft flying means fewer planes need to be produced or repaired. Given the inventory backlog of new planes that are built but undelivered or unsold, more aircraft will be delivered to airlines over the next several years than will be produced by aerospace manufacturers. While production and deliveries are closely aligned in normal years, this imbalance reflects conflicting pressures on plane manufacturers to balance the realities of lower market demand with needs of key suppliers to maintain enough production, Oliver Wyman says.

“The Middle East sits in a unique position in dealing with the consequences of the pandemic and the airline losses from it. Mostly state-owned operators are somewhat protected from the short-term financial hit, given that the government will likely provide financial support,” said Michael Wette, Transportation and Services partner at Oliver Wyman.

“While the regional fleet will not recover until early 2023, it is not expected to impact the medium or long-term growth of the region, particularly when it comes to the short-haul fleet.”

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The impact of Covid-19 on the Middle East maintenance, repair, and overhaul (MRO) market will also be significant – both in the short and long terms. According to the report, the regional MRO would recover in 2023 with the Middle East having the slowest recovery timeline amongst regions. According to the report, this is due to an outsized exposure to international travel, recovery of which is expected to lag until 2025.

According to the report, Middle East low cost/budget airlines have hundreds of narrowbodies on order, given the region’s narrowbody fleet size of just 500 aircraft at the start of 2020. In the upcoming period, regional jets are expected to see strong growth. With the long-term widebody growth forecast reduced by about one percentage point on an annual basis, narrowbodies are estimated to overtake the widebody fleet beginning in 2027.

The Middle East has the slowest recovery timeline, attributable to an outsized exposure to international travel compared to other regions. Regional traffic is expected to recover at a more accelerated pace, which will drive a shift in the distribution of passengers within the region and affect the makeup of the fleet.

“A mitigating factor that could partially offset the drop in international demand is the relatively large number of narrowbody deliveries scheduled in the region over the next decade. These deliveries would help recoup some of the MRO demand lost from the cut in widebody deliveries to the region,” Wette added.

After recovery, the Middle East outlook stabilises with MRO growth of more than two per cent annually as its relatively young fleet grows at a CAGR of over six per cent between 2023 and 2031.

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