Aircraft at the Farnborough International Airshow in the UK, on Monday. To guarantee parts delivery, some suppliers are pushing plane manufacturers to order many months in advance. Bloomberg
Aircraft at the Farnborough International Airshow in the UK, on Monday. To guarantee parts delivery, some suppliers are pushing plane manufacturers to order many months in advance. Bloomberg
Aircraft at the Farnborough International Airshow in the UK, on Monday. To guarantee parts delivery, some suppliers are pushing plane manufacturers to order many months in advance. Bloomberg
Aircraft at the Farnborough International Airshow in the UK, on Monday. To guarantee parts delivery, some suppliers are pushing plane manufacturers to order many months in advance. Bloomberg

Airline industry's take-off threatened by supply chain chaos


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The global air industry is in the midst of a post-pandemic rebound, but supply chain problems have left suppliers and manufacturers scrambling to source everything from raw materials to small electronic components to keep production moving.

From multinationals to family-run stockists, few have been spared the impact of shortages or delays. As a result, this week's Farnborough Airshow has been more about the factory floor than the usual shop window for new orders.

"We are keeping our head above water, keeping the flow happening, but the gymnastics required to make that happen are as difficult now as they have ever been," Stephen Timm, president of industry major Collins Aerospace, said.

At the other end of the spectrum, where suppliers lack the clout of a Collins or Honeywell, things are even more uncertain.

"At the moment it's extremely challenging because of the lack of raw materials," said Paul Wingfield, business development manager at Stokenchurch, England-based Aircraft Materials, which supplies alloys including aluminium, nickel, magnesium, titanium and nickel for the industry.

Not only are the mills that his company works with having trouble finding raw materials, but distributors are wary of holding on to inventory when there is a risk of recession.

"Nobody knows what the economy is going to do, so nobody's willing to invest in stock at the moment," Mr Wingfield said.

In conversations at this week's show, suppliers say material and parts delays have meant pushing manufacturers to order earlier, while manufacturers like Boeing have found themselves wading into the supply chain to keep parts flowing.

"We're going deeper into the supply chain than we've ever had to go to help our suppliers solve problems," said Cory Gionet, Boeing's vice president in charge of supply chains for commercial airplanes.

Earlier this year, Boeing said its 737 MAX aircraft production and deliveries were hit by shortages of a particular wiring connector.

Suppliers face lengthening lead times to source materials or components that can now run six months to over a year, threatening the manufacturers' plans to ramp up output.

To guarantee parts delivery, some suppliers are pushing manufacturers to order many months in advance, even if it means suppliers have to tie up capital by holding on to inventory for longer.

  • Visitors watch a RAF F-35 aircraft at the Farnborough International Airshow in Hampshire, southern England. Reuters
    Visitors watch a RAF F-35 aircraft at the Farnborough International Airshow in Hampshire, southern England. Reuters
  • An Airbus SE A350 aircraft lands after an aerial display. Bloomberg
    An Airbus SE A350 aircraft lands after an aerial display. Bloomberg
  • An Embraer C-390 Millennium military transport aircraft, used by Brazil's Airforce, on display. AFP
    An Embraer C-390 Millennium military transport aircraft, used by Brazil's Airforce, on display. AFP
  • A detailed view of a Pratt & Whitney PW123 engine. Reuters
    A detailed view of a Pratt & Whitney PW123 engine. Reuters
  • The RAF's Red Arrows aerobatics team perform. AP
    The RAF's Red Arrows aerobatics team perform. AP
  • Visitors shelter from the sun as they look around the show. AP
    Visitors shelter from the sun as they look around the show. AP
  • An Embraer E190-E2 aircraft. AFP
    An Embraer E190-E2 aircraft. AFP
  • Visitors look at a model of the Wisk Aero autonomous aircraft. AP
    Visitors look at a model of the Wisk Aero autonomous aircraft. AP
  • A member of staff shelters from the sun. AP
    A member of staff shelters from the sun. AP
  • Attendees walk past a poster of a Boom Supersonic concept Overture aircraft. AFP
    Attendees walk past a poster of a Boom Supersonic concept Overture aircraft. AFP
  • A US Air Force F-35A fighter jet on display. Bloomberg
    A US Air Force F-35A fighter jet on display. Bloomberg
  • A model of proposed jet fighter aircraft Tempest, a joint programme by a consortium known as 'Team Tempest', which includes Britain's Ministry of Defence, BAE Systems, Rolls-Royce, Leonardo SPA, MBDA and Saab. AFP
    A model of proposed jet fighter aircraft Tempest, a joint programme by a consortium known as 'Team Tempest', which includes Britain's Ministry of Defence, BAE Systems, Rolls-Royce, Leonardo SPA, MBDA and Saab. AFP
  • Visitors watch the Embraer E2 Profit Hunter plane taking off. AFP
    Visitors watch the Embraer E2 Profit Hunter plane taking off. AFP
  • An Aksungur drone, manufactured by Turkish Aerospace Industries, on display. Bloomberg
    An Aksungur drone, manufactured by Turkish Aerospace Industries, on display. Bloomberg
  • An Airbus A350 plane flying over the crowds at Farnborough. AFP
    An Airbus A350 plane flying over the crowds at Farnborough. AFP
  • Soldiers pose beside a Leonardo helicopter. AP
    Soldiers pose beside a Leonardo helicopter. AP
  • An aviation enthusiast shelters from the sun at the show. Temperatures were forecast to reach 40°C in parts of England. Bloomberg
    An aviation enthusiast shelters from the sun at the show. Temperatures were forecast to reach 40°C in parts of England. Bloomberg
  • A model of a Pratt & Whitney GTF engine. This is the first Farnborough in four years, due to the pandemic. Bloomberg
    A model of a Pratt & Whitney GTF engine. This is the first Farnborough in four years, due to the pandemic. Bloomberg
  • A Boeing 737-9 puts on a display at Farnborough. Bloomberg
    A Boeing 737-9 puts on a display at Farnborough. Bloomberg
  • Visitors examine water barrels in a Boeing 777X, in an experiment on weight distribution. AFP
    Visitors examine water barrels in a Boeing 777X, in an experiment on weight distribution. AFP
  • An aviation fan uses a fan to keep cool amid soaring temperatures. Bloomberg
    An aviation fan uses a fan to keep cool amid soaring temperatures. Bloomberg
  • A worker keeps a GulfStream Aerospace Corp G650 business jet gleaming. Bloomberg
    A worker keeps a GulfStream Aerospace Corp G650 business jet gleaming. Bloomberg
  • Britain's Prime Minister Boris Johnson tours Farnborough, a vital marketplace for the country's aviation industry. AP
    Britain's Prime Minister Boris Johnson tours Farnborough, a vital marketplace for the country's aviation industry. AP
  • Visitors board a Boeing 777X. Deals worth £161 billion ($192bn) were agreed the last time Farnborough was held, organisers said. AFP
    Visitors board a Boeing 777X. Deals worth £161 billion ($192bn) were agreed the last time Farnborough was held, organisers said. AFP
  • Boris Johnson views the display by SaxaVord, the UK Spaceport. PA
    Boris Johnson views the display by SaxaVord, the UK Spaceport. PA
  • More than 80,000 visitors from 96 countries are expected to attend this week's five-day event. Bloomberg
    More than 80,000 visitors from 96 countries are expected to attend this week's five-day event. Bloomberg

Switching their own suppliers can be almost impossible in a highly-regulated industry where components have to undergo rigorous approval processes.

"It's not a case of picking up and going to a different supplier, the validation process for doing that is actually often longer than the lead time," said Neil Lawrence, business development engineer at Woking, England-based Magnet Schultz.

It makes solenoids — electromagnetic valves — used in everything from plane hydraulics controls to air conditioning. Those valves range in price from a few hundred to tens of thousands of pounds.

Shortages of electronics components mean some will not be delivered for more than a year.

"We're getting terrible, terrible lead times on some parts," Mr Lawrence said.

Supply chain problems come at a time when the industry is eager to build ever more planes.

Airbus wants to raise A320 production rates to 75 single-aisle aircraft monthly over the next three years, from 50 now. But delays in engine supplies have held back aircraft deliveries.

Engine maker Pratt & Whitney, like Collins, a unit of Raytheon Technologies, said this week it aimed to get its engine deliveries for the A320 back on track by early 2023 as it battles labour shortages and supply chain snags.

"Certainly we're not happy about the position that we're in right now," Pratt & Whitney president Shane Eddy said.

Airbus chief executive Guillaume Faury said the show had brought slightly more comfort on engine delays.

But France's Dassault Aviation said it was "very concerned" about supply chains.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

The biog

Age: 30

Position: Senior lab superintendent at Emirates Global Aluminium

Education: Bachelor of science in chemical engineering, post graduate degree in light metal reduction technology

Favourite part of job: The challenge, because it is challenging

Favourite quote: “Be the change you wish to see in the world,” Gandi

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Updated: July 22, 2022, 3:30 AM