Bruce Andrews, partner, and Joseph Lakaj, analyst, at Alderman and Company say the need to keep older aircraft flying means value isn’t just found ‘under the hood’

Global demand for air travel has been increasing significantly for the past few years, with record highs being hit in 2024.

However, all this growth is not worth celebrating just yet, as airlines are trying to manage this growth alongside their aging fleet.

Delays in deliveries from major manufacturers Boeing and Airbus have led to airlines seeking different avenues to maximise the value of their existing fleets, as the average age of the flying commercial aircraft fleet has reached an all-time high of 14.4 years.

Instead of relying solely on new aircraft, airlines are investing heavily in cabin upgrades and component replacement to enhance the passenger experience, improve operational efficiency, and extend the lifespan of their existing planes.

This shift in value creation is changing the aviation industry, with interiors and maintenance, repair, and overhaul (MRO) services taking centre stage.

For example, take Emirates, which recently announced an increase from its original $4 billion investment to $5 billion to refurbish its aircraft.

This programme was initially intended to refurbish 67 A380s and 53 777s, but delivery delays were only ramping up, and this led to the program being extended to include an additional 170 aircraft.

Ahmed Saga, Emirates’ head of engineering and MRO, has said that the “additions to the modification program were primarily driven by the lack of new aircraft”.

These refurbishments prioritised cabin upgrades as the airline wanted to maintain its reputation for luxury and comfort.

Through this program, Emirates was able to introduce a new product, premium economy, which was a significant contributor to the airline’s record-high profits by the end of the 2024 fiscal year, showcasing some of the benefits from this approach to value creation.

This was only phase one of a six-phase program, with priority being upgrading comfort for phase one, then focusing on upgrades to the IFE system and providing modern connectivity options with phase two.

Modern connectivity has become a cornerstone for airline innovation, with carriers Virgin Atlantic and United Airlines prioritising high-speed internet to improve the passenger experience.

As aircraft delivery delays persist, airlines are retrofitting existing fleets with advanced technologies, including Starlink, to stay competitive.

Virgin Atlantic aims to be the first UK airline to introduce Starlink connectivity, with plans for a whole fleet rollout by 2027.

It plans on including the unlimited high-speed Wi-Fi service for Virgin’s Flying Club members as a loyalty incentive.

Similarly, in March, United Airlines also began a roll-out of Starlink in its regional fleet and provided free access for all MileagePlus customers.

These connectivity upgrades enhance in-flight entertainment and productivity but also foster customer loyalty through delivering seamless, premium services that encourage repeat business.

Other major airlines are actively upgrading and replacing aircraft interiors, with the major theme being enhancing the passenger experience and adapting to what the current market demands are.

Southwest Airlines is investing in a redesigned cabin with RECARO seats, featuring adjustable headrests, device holders, and larger overhead bins, with retrofits for existing 737-800s and 737-700s starting mid-year.

Delta Air Lines is rolling out a new cabin design with updated seating materials, enhanced lighting, and a modern colour palette debuting on a Boeing 757 in late 2024 and an Airbus A350 in early 2025, aiming for a uniform fleet aesthetic.

American Airlines is introducing Flagship Suite seats with privacy doors on retrofitted Boeing 777-300ERs, while also upgrading Airbus 319s with larger bins and power outlets, starting in spring 2025.

Air France is modernising its cabins, with new Business Class configurations on Airbus A350s, emphasising comfort and privacy with updated seating and mood lighting.

These upgrades reflect a broader industry trend of enhancing passenger comfort, adding premium seating, and integrating advanced technologies to maximise fleet value and competitiveness, creating opportunities for both aerospace suppliers and MRO providers.

We, at Alderman and Company, believe that the ongoing significant trend toward aircraft interior upgrades and component modernisation presents a compelling growth opportunity for both middle-market aerospace suppliers and MRO providers.

As major carriers invest billions of dollars in refurbishing and retrofitting their current fleets to extend their life, suppliers of high-quality interior components and cabin technologies, as well as MRO providers, are seeing increased demand.

This relationship not only supports aftermarket revenue growth but also enhances the intrinsic value of these companies to both financial and strategic buyers.

In this new landscape, value isn’t just found under the hood – it’s stitched into the seats, streamed through satellites, and bolted into every panel that shapes the passenger experience.