Tariffs could lift Boeing and Airbus plane prices even higher
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The impact of tariffs is not reflected in the companies’ stale official pricing literature - Boeing has not updated its figures since 2023, while Airbus’ catalogue is untouched since 2018.
PHOTO: AFP
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NEW YORK – Commercial plane prices, already lifted in recent years due to pandemic supply chain shocks, are poised to climb further as Boeing and Airbus are buffeted by trade tariffs
“Compared with 2018, prices for commercial jets have risen by around 30 per cent,” an aviation expert said on condition of anonymity.
The American and European aerospace giants have grappled with higher expenses for primary materials such as titanium, components and energy, as well as overall labour cost pressures.
To resolve a labour strike
Just months earlier, Spirit AeroSystems, a major supplier to both Boeing and Airbus, reached an agreement with similar wage increases.
Mr Richard Aboulafia, managing director at consultancy AeroDynamic Advisory, said items whose prices have inflated “at a particularly high rate” include castings, forgings and “anything titanium… especially since all that Russian capacity has been cut off from the US and, to a lesser extent, from Europe”.
He estimates prices for materials and equipment have risen 40 per cent since 2021. That was before US President Donald Trump’s 25 per cent tariffs on steel and aluminium, which are used in planes. “It’s kind of ironic – raw materials were not a problem, but Donald Trump is determined to make them a problem,” Mr Aboulafia said.
Inflation in aviation has been accelerating, and “that’s only going to get worse with these tariffs that are being imposed”, said Mr John Persinos, editor-in-chief at Aircraft Value News. “These tariffs are disastrous.”
What’s more, the newer generation of planes, such as the Boeing 737 Max and 787 Dreamliner and the Airbus A321neo, can command premium prices, thanks to their lower fuel consumption.
Listed prices a ‘fiction’
The impact of tariffs is not reflected in the companies’ stale official pricing literature.
Boeing has not updated its figures since 2023, while Airbus’ catalogue is untouched since 2018.
“Catalogue prices were a complete work of fiction,” Mr Aboulafia said. “You got 50 per cent off for showing up dressed nicely.”
Airbus decided to abandon the use of catalogue prices “a long time ago” because they “were not closely correlated to the final price, which was based on each specific contract in terms of plane configuration and detail”, the firm said.
The aerospace companies will often negotiate additional services such as plane support or training at a discounted level when aircraft are delivered, said the expert who requested anonymity.
Such deals make the official listed prices less meaningful.
Contracts for new planes typically include adjustment clauses for inflation, while pricing can also be tweaked if deliveries are delayed.
Since the contracts are usually denominated in dollars, there can also be allowances for swings in exchange rates.
Boeing said it evaluates price based on production costs and other market factors, but does not discuss the details publicly since they pertain to competition.
Both Boeing and Airbus currently have a substantial backlog of plane orders that will keep them occupied through the end of the decade. But that strong demand has not in itself boosted pricing much.
“It’s a very competitive situation,” said the expert. “The two companies fight for every transaction and that impacts pricing.”
Most airlines opt to do business with both Airbus and Boeing.
“Before Covid, Boeing and Airbus competed for a market where prices were really lower, maybe even too low,” said Mr Manfred Hader of consultancy Roland Berger. But airlines have been able to afford more expensive planes in the post-lockdown period, where there has been strong travel demand, boosting ticket prices and airline profitability, Mr Hader said.
In February, Japanese carrier ANA ordered 77 planes from Boeing, Airbus and Brazilian firm Embraer, providing updated catalogue prices that show an increase from earlier levels.
The order priced Boeing’s 787 Dreamliner at around US$386 million (S$506 million) and the 737 Max at US$159 million, compared with US$292 million and US$121.6 million in 2023, according to AFP calculations.
It priced the Airbus A321neo at around US$148 million, compared with the US$129.5 million in the 2018 catalogue. AFP
