2026-02-03 11:17
publication
2026-02-03 11:17
The largest air show in Asia, the Singapore Airshow, also became an arena for a behind-the-scenes fight between Rolls-Royce and the airlines. According to the aircraft engine manufacturer, drastic increases in engine service fees are not a whim, but the foundation of the transformation program.
Willie Walsh, director general of the International Air Transport Association (IATA), on the eve of the Singapore Airshow thundered that supply problems and the resulting increase in engine parts prices are widening the gap between the thin margins of airlines and those of engine suppliers. “It's not sustainable… I think we'll have to have a more serious discussion about it now,” he said.
The IATA president also questioned the image of industry cooperation often presented at events such as this week's largest air show in Asia. “It upsets me when I hear (engine manufacturers) talk about partnerships and partners. They are not our partners,” Walsh said.
The comments made at the Changi Aviation Summit are the latest in a supply dispute between airlines, engine makers and aircraft manufacturers. Engine manufacturers rarely discuss pricing, but they strongly defend efforts to reflect the scale of investment needed to develop jet engines.
“Supply chain disruptions caused by the COVID pandemic”
Rob Watson, president of civil aviation at Rolls-Royce, said on the sidelines of the Singapore Airshow that “our prices reflect supply chain disruptions caused by the COVID pandemic.” “For us, pricing was to some extent a function of costs.
“They reflect the cost increases that are resulting from all these supply chain challenges that everyone is talking about,” he added.
In short: Rolls-Royce finally wants to make money from what it produces. However, this “shock therapy” caused fury among the biggest players. And they have reasons for this…
Rolls-Royce demands premium rates for a product that he's in a good mood
Tim Clark from Emirates, known for not biting his tongue, directly points out the manufacturer's strategy. For airlines, it's simple: Rolls-Royce demands premium rates for a product that, especially in difficult conditions, is in a bad mood. Clark does not hide his irritation, suggesting that expecting huge subsidies while having problems with the durability of the engines is, at the very least, a daring marketing move. In fact, two years ago he declared that Emirates would not buy Rolls-Royce engines until they knew they worked.
Watson added that Rolls-Royce is “well on track” with a program to improve the durability of its largest engine designed for the Airbus A350-1000 long-haul aircraft. The improvements introduced will allow the time between inspections to be extended by 60%, and further improvements are expected from 2028.
Profitability is a challenge for the aviation industry
Profitability continues to be a significant challenge for our industry. We forecast that profitability will be just below $40 billion in 2025, which will translate into a net margin of 3.9%. In 2026, we expect net profitability to increase to $41 billion. However, this still means a very low net margin of 3.9%, i.e. an operating margin of 6.9%, said Willie Walsh, Director General of IATA at the Changi Aviation Summit 2026.
He added that, for comparison, the best year in the history of the aviation industry in terms of profitability was 2015, when we achieved an operating margin of 8.3% and a net margin of 5.0%. This will therefore continue to pose a significant challenge for our industry in 2026. Net profit per passenger in 2025 and 2026 will be just $7.9.
Problematic Trent XWB-97 powering the giants
At the center of this storm are the blades of the Trent XWB-97 engine spinning. This technological marvel powering the Airbus A350-1000 has become a symbol of an industry stalemate. Carriers operating in hot climates complain that engines require servicing much more frequently than promised in brochures. When we add new, higher price lists for services, we get an equation in which the airlines' margin starts to evaporate faster than the afterburner fuel.
According to Steven Udvar-Hazy of Air Lease Corp. the problem is monopoly. Engine manufacturers have created an almost perfect system – they control not only the product, but also the entire circulation of spare parts and service certification. In this arrangement, the airlines are essentially their hostages. Since they have no alternative, they must pay, even if the only justification for the increase is the need to improve Rolls-Royce's Excel financial performance.
Despite the image-related fire, Tufan Erginbilgic, the head of Rolls-Royce, does not intend to use a fire extinguisher. On the contrary, it adds fuel to the fire. In one of the interviews, he admitted that only a rich portfolio will allow the company to correct past mistakes and finally provide reliable technology. It's a risky game va banque. Rolls-Royce is betting everything on one card: either it will force the market to accept the new price reality, or it will alienate customers so much that in subsequent orders Airbuses will leave the factories with competitors' engines.
Prepared by JM
