Starting from ground zero, the quiet town of Farnborough in Hampshire, England, gets transformed every two years into the bustling theater of the aircraft industry. For one week in July, the sound of private jets gives way to the roar of fighter planes and the excitement of the Farnborough International Airshow.

Big deal: an airshow at which the world's top leaders from airlines, aircraft makers, and arms manufacturers used to strut their stuff, making juicy deals. It is always an opportunity for these companies to impress potential buyers and keep pace with industry trends.

Supply Chain Woes

Only a few years ago, the pandemic hit hard across the aviation world. In this period, many have been of the view that the industry would slow. Now, what is feared most is something different. Rather, will it be a question of whether people would want to fly? The big question being asked is whether firms can make enough aircraft fast enough to meet demand.

"We thought the supply chain problems would be better by now, but that hasn't happened," argues Nick Cunningham, aerospace and defense expert. In other words, even with new aircraft in high demand, there are still problems obtaining the parts needed to build them.

The Future of Air Travel

The International Civil Aviation Organization says that by 2050, the number of people flying around the world may triple. In powering this growth, it would lead to a tremendous surge in carbon dioxide emissions and hence quicken climate change. These are major issues the airshow usually targets, more so now that the world has been enduring record heatwaves for the past years.

Despite the environmental concerns associated with this mode of transport, big plane-makers such as Airbus of Europe and America's Boeing are still scrambling to receive as many orders as possible. As of the end of last year, Airbus had a whopping backlog of 8,626 orders, while Boeing had 5,600. Boeing has faced a variety of issues of late, with two fatal crashes of their 737 Max planes and even one recently where a door panel blew off while in flight. This month, Boeing even pleaded guilty to breaking legal rules related to the crashes. A strong showing at the airshow could put Boeing in a better position.

Airbus in Front

At present, Airbus stands ahead of Boeing in the aircraft industry. It will tout the Airbus A321XLR, which it has named the "extra long-range passenger jet," at the airshow. It's a hot-selling jet, and Boeing, somehow, needs to match that demand. However, Airbus had its own set of issues. The A321XLR arrived a year late, and last month Airbus was compelled to trim its production forecast for this year from 800 to 770 aircraft because of difficulties in finding parts and materials.

"Supply chain issues and other problems have continued to delay new aircraft deliveries and make the future uncertain," noted another industry analyst, Robert Stallard. This feeling of things gradually getting better has been replaced with concerns as to whether companies can speed up their production.

Defense Industry at the Airshow

The Farnborough Airshow assumes extra significance for defence firms that want to sell products to the UK government. The town of Farnborough itself, which is part of the Aldershot parliamentary constituency, has moved from Conservative to Labour representation. This shift in the political scenario of this town needs to be viewed in the light of the larger shifts in the defence sector.

Francis Tusa, the editor of the Defence Analysis newsletter, said that when former Prime Minister David Cameron opened the airshow back in 2012, so many of the attending industry leaders were keen to hear what plans the government had. This year it could be that Labour's new defense ministers visit—including John Healey, Vernon Coaker, and Maria Eagle—and even Labour leader Keir Starmer. Executives will want to know if any new defense strategies might impact their orders.

Military Spending Boom

The increase in global conflicts in the recent past has been an elixir for arms manufacturers. The market values of firms like Babcock, BAE Systems, and Rolls-Royce have significantly risen over the past two years since the completion of the last Farnborough Airshow. Partly due to the surge in military spending, ensuing from the outbreak of conflicts in Ukraine and Gaza, the global aerospace and defense industry reached record revenues of $829 billion in 2023.

Government plans for weapons suggest to Cunningham a big increase in military spending similar to what happened before World War II. On the other hand, with this much demand, the makers of defense equipment may fall into similar problems in their supply chain as their counterparts making civilian aircraft.

While the defense industry hasn't had to grapple with nearly as many problems in its supply chains recently compared with the civilian sector, signs indicate that this could be changing. "We haven't seen major issues yet, but they could be coming," says Cunningham.

In a nutshell, the Farnborough Airshow was the premier event for the aircraft and defense industries to showcase their products and share their plans for the future. The two sectors, while highly in demand and abuzz with new technologies, are struggling through supply chain woes that will eventually affect the fulfillment of future requirements.