When looking at the remarkable turnaround in the Rolls-Royce (LSE: RR.) share price, it’s hard to overstate the importance of flying hours. The share price surged from below the £1 mark to over £11 in October 2025 on the back of the world getting flying again.
The FTSE 100 engine maker doesn’t just sell the engines for aeroplanes to whizz around the skies. It services them as well. And what many don’t know is that the bulk of revenue comes from maintenance costs. Put simply, more flying hours mean more earnings.
It’s perhaps no surprise then that the Rolls-Royce share price has spiralled upwards as the number of global flight passengers sets new records. With support from engines and other products sold in defence and power systems divisions? I predict that the shares might continue surging to the £25 mark and beyond.
Long-lasting success
Rolls-Royce will celebrate the 63rd anniversary of its ‘Power-by-the-Hour’ business model this year. I think it’s fair to say the current success has its roots in the 1960s initiative.
The general idea was not to build the business around selling engines to airlines. These are sometimes sold at a loss. But instead, the lion’s share of revenues are drawn from aftermarket servicing.
This led to stable and long-lasting income streams for the British engine maker. But more than that, it was a boon for the airlines, who could expect more reliability. It’s a form of vertical integration which worked out well for all parties involved.
The knock-on effect has been that, several decades on from the introduction of ‘Power-by-the-Hour’, Rolls-Royce is an industry titan. The firm is one of four biggest engine makers worldwide. It’s the biggest UK manufacturing firm. And at a £125bn market cap, it’s the fifth-biggest listing on the FTSE 100. The share price has been doing all right too.
What next?
So, where do we go from here? Well, I wouldn’t bet against flying hours only increasing from here on. Globalisation is making us more connected than ever before, and that means lots and lots of flying.
Whether it’s going on holiday, visits to a home country, or business trips, there’s plenty of reasons to think they will keep increasing. Middle-income countries growing richer and taking more flights is something to keep an eye on too. All of which should support the Rolls-Royce share price.
A downside here is perhaps that Rolls-Royce specialises in widebody aircraft. Airlines have been moving towards narrow-bodied planes in recent years due to cost advantages. This could lead to a lowered market share if the trend continues.
Let’s also not forget how fragile our interconnected world can be. COVID-19 was a recent reminder of that. But global conflicts and natural disasters could be a threat too.
All in all, though, I think Rolls-Royce shares have a bright future. I would say every investor should think about adding the stock to their portfolio.
