Abrupt distortions can appear as a result of transient crosswind or during rapid aircraft maneuvers. Such distortions are known to reduce the aerodynamic stability of engines and therefore present a major concern to all aero-engine manufacturers. To assess the aerodynamic stability of fan blades due to distortions, rig tests are usually carried out to establish the loss in stall margin. In such test campaigns, an exit duct (which is followed by a nozzle) is placed downstream of the fan blade, and the operating condition of the fan is controlled by this nozzle. It is shown in this paper that in such rig tests, the length of duct downstream of a fan has a significant impact on fan stall margin. The key contributor for such interaction is the dynamic response of the exit duct, and the aerodynamic stability of the fan is affected by the acoustic reflection from the exit nozzle. To study the underlying physics, transient response in the exit duct downstream of a transonic fan stage was studied numerically using a simplified model. Simulation results, along with calculations based on analytical theories, confirmed the generation, propagation, and reflection of waves induced by the inlet distortion. A quantitative relationship concerning the lengths of the compression system is introduced which determines whether a duct setup would have beneficial or detrimental influences on compressor aerodynamic stability. The findings of this research have great implications for the stability assessment of fans as the stability margin can be affected by the waves generated in bypass ducts.