Aircraft leasing giant Steven Udvar-Hazy recently confirmed what many industry stakeholders had been reluctant to admit - there is a bottleneck in the aircraft interiors space with no near-term solution in sight.
"It's pretty close to the limit," said Udvar-Hazy at the International Society of Transport Aircraft Trading conference in March. "For example, seats are becoming a huge constraint, especially after that Japanese disaster where [Koito Industries] falsified certification. Galleys are also constrained.
"Some suppliers are telling us they are pretty stretched. It's the weakest supplier that really runs how many airplanes you can do, it's not your strongest supplier."
Several factors are putting pressure on the interiors supply chain, particularly in the retrofit market. As cited by Udvar-Hazy, Koito's falsification of flammability and dynamic test data on 150,000 seats in the world fleet has had a big impact, resulting in FAA and EASA airworthiness directives and extra regulatory scrutiny of seat manufacturers.
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Economy seats await installation at Boeing
Doria De Chiara, business development manager for seat maker Geven, says: "There is also extraordinary emergency growth occurring due to the fact that airlines are now replacing ageing aircraft that weren't replaced when they needed to be replaced because of various crises and incidents that slowed down the aviation industry - the Gulf War and the 9/11 terrorist attacks, for example - so that caught up with natural growth."
Vern Alg, interiors expert and owner of ALG Consulting, says: "With two widebody fleet types coming on line - the Boeing 787 and the Airbus A350 XWB - plus a lot of activity in the narrowbodies, especially lately with the A320neo [new engine option], there are just not enough seat manufacturers and not enough seat capacity out there. I see galleys as equally as serious a problem as seats. You have so few suppliers out there, and their capacity is so limited."
Alg adds: "Anybody who has a short-term need for [customised] seats or galleys is likely having some very, very serious problems. Whether you're an airline picking up a number of aircraft that may be available or a leasing company that finds itself with an aircraft available, you would be buying off the shelf, but even then there are not that many out there."
A seemingly logical answer to the interiors conundrum would be for manufacturers to expand production of seats and galleys. "But natural growth plus extraordinary growth doesn't necessarily justify expanding a company by a large measure," says De Chiara, "so there will be flexible ramp-ups going on with temporary measures."
Alg adds: "Manufacturers are scared to grow a lot because they could end up with capital doing nothing and laying off people."
Major interiors specialist B/E Aerospace has seen demand rise by almost 30% this year compared with last year. "Our production levels would now be equalling or slightly exceeding what we saw in 2007, which was the last peak we had," says B/E vice-president and general manager seating products, Tom Plant. "We have seen a full recovering in the industry in terms of demand for seats."
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B/E has room to add further capacity, says Plant, "so we'll see further growth next year". But he adds: "We don't want to add too much capacity and have things sitting idle, but I'd say in terms of executing what's on our plate right now, our delivery is exemplary."
When news of the Koito scandal began to emerge in late 2009 and early 2010, trusted seat manufacturers were able to absorb some of the seat programmes that could not be supported by Koito. However, several airlines suffered aircraft delivery delays. In one particularly notable case, Airbus A330s destined for Thai Airways International were delivered to the carrier without seats, which had to be retrofitted.
"We had a lot of short-term demands from Boeing to jump in and take over some Koito programmes, mainly with Continental Airlines," says Plant. "That was very difficult at the time. We acted last-minute with short lead time." But he says that additional business is now part of "our regular backlog", so the constriction caused by Koito has "kind of disappeared off the radar screen for us".
But from a regulatory oversight standpoint, Koito did do some damage that is proving financially burdensome to manufacturers.
Plant says: "There isn't, as such, a simple piece of documentation you can point to in the industry where the regulatory authorities are now telling you to do this versus that in previous history, but there is very much an incremental thing going on in flammability. I would say one of the biggest problems Koito had was flammability. They also had a lot of problems on dynamic testing, but that has always been clean cut, and the real problem was that Koito wasn't following them. So there have been no changes on dynamic testing, but on the flammability side, some of Koito's deviations from the rules have resulted in the rules being tightened to a large degree."
De Chiara adds: "They are coming down on those who have always been compliant and scrupulous on everything. What makes aviation products expensive are, in fact, the stringent airworthiness and safety-related rulings."
Airbus says it is not really seeing an interiors bottleneck in terms of linefit.
Vice-president marketing Bob Lange says the airframer is confident that B/E, Geven, Recaro and Zodiac Group - all offerable on the A320 family - will be able to meet demand even in the face of the A320neo's popularity. "The reason is that for some years now we have put in place a policy where we work with specific suppliers from top to bottom, from the CEO downwards, in a deeper way than ever before and far more upstream in terms of planning," he says.
"We are more open to them. We share more. We work with them to determine when they have constraints and why they have constraints. We are working on delivering stability and I think the best gauge of that is our track record in the last downturn. Two to three years back, all the naysayers in the industry said single-aisle production was way too high and was going to plummet, but it's exactly that kind of trough we've worked with our airline and lessor customers to avoid, because we are trying to establish stable growth and develop more value for the end customer."
Airbus is also seeing the emergence of new manufacturers, but warns there is no fast track to the position that proven reliable vendors have secured.
Lange says: "We are encouraging this competitive dynamic, but we want the new players to demonstrate robustness and quality and reliability which, typically, they are doing for the retrofit programme, and also to ensure they are capable of ramping up. You have to show you can do volume without sacrificing quality or robustness and this is where the new players have not yet convinced us."
Source: Flight International