Prices for commercial aircraft, which have already risen in recent years due to disruptions in the supply chain caused by the pandemic, are expected to increase further due to trade tariffs impacting Boeing and Airbus.
According to an aviation expert who wished to remain anonymous, “When compared to 2018, commercial jet prices have surged by about 30 percent.”
The leading aerospace manufacturers from the US and Europe are facing heightened costs for essential materials like titanium, as well as increased expenses for components, energy, and overall labor.
To address a labor dispute, Boeing struck a new agreement with its machinists’ union in Seattle late last year, which resulted in a 38 percent wage increase over a four-year span.
In a similar vein, Spirit AeroSystems, a key supplier for both Boeing and Airbus, also reached an agreement for comparable wage increases just months earlier.
Richard Aboulafia, managing director of AeroDynamic Advisory, indicated that certain materials, particularly castings, forgings, and titanium, have experienced significant price hikes. He noted that the reduction in Russian material supply to the US and, to a lesser degree, Europe has further exacerbated this issue.
Aboulafia estimates that the costs of materials and equipment have escalated by 40 percent since 2021, prior to the imposition of Trump’s 25 percent tariffs on steel and aluminum used in aircraft.
He remarked, “It’s somewhat ironic that raw materials were not initially problematic, but Donald Trump has ensured they have become an issue.”
The trend of inflation in aviation is accelerating, and John Persinos, the editor-in-chief of Aircraft Value News, agrees that “this will only worsen with the imposition of tariffs.” He described the tariffs as being “disastrous.”
Additionally, newer aircraft models such as the Boeing 737 MAX, 787 Dreamliner, and Airbus A321neo are able to command higher prices due to their improved fuel efficiency.
Catalogue Prices: A Misleading Indicator
The effect of tariffs is not represented in the outdated official pricing documents of the companies.
Boeing has not revised its pricing figures since 2023, while Airbus’s catalog has remained unchanged since 2018.
Boeing’s pricing is described by Aboulafia as “a complete fiction,” suggesting that significant discounts are often available depending on the circumstances of the purchase.
Airbus made the decision to stop using catalogue prices due to their lack of relevance in relation to final pricing, which varies based on individual contracts, aircraft specifications, and features, according to the company.
Industry experts note that aerospace companies frequently negotiate additional services such as aircraft support or training, often at reduced rates upon delivery, adding further complexity to the pricing structure.
Most contracts for new aircraft contain clauses for inflation adjustments and provisions for pricing changes if there are delivery delays.
Also, since contracts are typically stated in dollars, there are adjustments for fluctuations in currency exchange rates.
Boeing has stated that it evaluates its pricing based on production costs and market conditions, but does not publicly disclose details to protect competitive information.
Both Boeing and Airbus have substantial order backlogs that will keep them busy through the decade. However, this high demand has not significantly affected the pricing dynamics.
An expert noted, “It’s a highly competitive landscape, with both companies vying for every deal, which influences prices.”
Many airlines choose to engage with both Boeing and Airbus.
According to Manfred Hader from Roland Berger consultancy, prior to the pandemic, both companies were competing in a market characterized by lower prices, which may have been excessively low.
Post-pandemic, airlines have been able to invest in costlier planes due to increased travel demand, resulting in higher ticket prices and enhanced airline profitability, Hader added.
In February, the Japanese airline ANA placed an order for 77 aircraft from Boeing, Airbus, and Brazil’s Embraer, revealing updated catalog prices that reflect increases from previous figures.
The order values Boeing’s 787 Dreamliner at approximately $386 million and the 737 MAX at $159 million, compared to $292 million and $121.6 million in 2023, based on calculations by AFP.
Meanwhile, the Airbus A321neo is priced around $148 million, up from $129.5 million according to the 2018 catalog.