Trump tariffs, competition to push Boeing, Airbus jet prices even higher

Experts described the official prices as "a complete work of fiction", noting significant discounts based on contract specifics, according to media reports

Prices of commercial aircraft, already elevated in recent years due to Covid-induced supply chain disruptions, are set to rise further as Boeing and Airbus face renewed pressure from trade tariffs imposed by US President Donald Trump, reported news agency AFP.

 

In conversation with AFP, an aviation expert said the cost of commercial jets has increased by around 30 per cent since 2018 owing to higher prices of raw materials, components and labour. The aerospace industry, dominated by US and European giants, is grappling with inflationary pressures on inputs such as titanium and energy. 

 

 

Labour costs and contracts add to burden

 

According to the report, Boeing recently agreed to a new contract with its Seattle-based machinist union, lifting wages by 38 per cent over four years. Similarly, Spirit AeroSystems, a major supplier to Boeing and Airbus, signed an agreement that included comparable wage increases. These developments are adding to cost pressures across the industry.

 

Titanium costs surge amid US sanctions

 

The report quoted Richard Aboulafia, managing director at AeroDynamic Advisory components, saying that such as castings, forgings, and titanium-based materials have seen particularly steep inflation, exacerbated by the disruption of Russian supply chains. He estimates that material and equipment prices have risen by 40 per cent since 2021, even before factoring in Trump's 25 per cent tariffs on steel and aluminium.

 

Aboulafia said, “It’s kind of ironic, raw materials were not a problem, but Donald Trump is determined to make them a problem.”

 

Tariffs blamed for worsening inflation

 

Experts warn that inflation in aviation is accelerating, with US-imposed tariffs set to intensify the problem. “These tariffs are disastrous,” said John Persinos, editor-in-chief of Aircraft Value News, according to the AFP report. 

 

Despite inflation, newer models such as Boeing’s 737 MAX and 787 Dreamliner, and Airbus’ A321neo, continue to attract premium pricing due to their fuel efficiency. However, the true cost of planes is often obscured by a lack of transparent pricing data.

 

Official catalogue prices called misleading

 

Neither Boeing nor Airbus has updated its catalogue prices recently. Boeing’s last update was in 2023, while Airbus stopped publishing new price lists in 2018. Experts described the official prices as “a complete work of fiction”, noting significant discounts based on contract specifics, the report said. Airbus confirmed that catalogue prices were discontinued as they did not reflect final negotiated costs.

 

Aircraft orders typically include provisions to adjust for inflation, delivery delays, and currency fluctuations. Boeing said it sets prices based on production costs and market factors but does not publicly share details due to competitive reasons.

 

Backlog strong, but pricing remains subdued

 

Boeing and Airbus are working through a sizeable order backlog expected to keep their production lines engaged through the end of the decade. However, strong demand alone has not significantly lifted aircraft prices.

 

“It’s a highly competitive environment,” the aviation expert said, noting that the two manufacturers compete intensely for every deal, which puts a cap on pricing, according to the report.

 

Most carriers continue to do business with both Airbus and Boeing, maintaining a balanced procurement strategy. Before the Covid-19 pandemic, competition between the two led to suppressed pricing. However, in the post-lockdown period, robust travel demand has boosted ticket prices and airline profitability, allowing carriers to absorb costlier aircraft, said Manfred Hader of consultancy Roland Berger.  (With Agency inputs)