Supply chain challenges could cost airlines more than $11 billion in 2025 says IATA

The International Air Transport Association (IATA) and global consulting firm Oliver Wyman have released a new report, Reviving the Commercial Aircraft Supply Chain. The report considers that it is an absolute urgent need for coordinated action to resolve deep-rooted production bottlenecks plaguing the aerospace industry. Particularly since Covid times.

The study finds that persistent supply chain disruptions are delaying aircraft and parts deliveries. The consequence is that airlines are forced to extend the use of older, less efficient planes. The global commercial aircraft backlog soared to over 17,000 units in 2024, up from an annual average of 13,000 between 2010 and 2019.

These production delays are expected to cost the airline industry more than $11 billion in 2025, driven by four key factors:

• Fuel inefficiency ($4.2 billion): Airlines are burning more fuel by operating aging aircraft while waiting for new deliveries.

• Maintenance costs ($3.1 billion): Older planes require more frequent and expensive upkeep.

• Leasing costs ($2.6 billion): Extended engine downtime has pushed up leasing rates by 20–30% since 2019.

• Inventory costs ($1.4 billion): Carriers are stockpiling spare parts to guard against unpredictable supply disruptions.

The supply shortage is also constraining capacity growth just as passenger demand continues to rise. In 2024, global air traffic grew 10.4%, outpacing available seat capacity, which rose only 8.7%. It consequently pushed load factors to a record 83.5%. Demand is expected to keep climbing in 2025.

IATA attributes the problem to multiple structural pressures — a fragile aerospace economic model, geopolitical instability, raw material shortages, and labor constraints. The report calls for a coordinated industry response involving original equipment manufacturers (OEMs), lessors, and suppliers to restore balance and strengthen resilience.

“Airlines depend on a reliable supply chain to operate and grow efficiently,” said Willie Walsh, IATA’s Director General. “Today, they face unprecedented waits for aircraft, engines, and parts — pushing costs up by at least $11 billion this year and limiting their ability to meet demand. Opening up the aftermarket and improving transparency across the supply chain could bring some relief.”

Four priority actions according to IATA

1. Open the aftermarket: Encourage more competition in Maintenance, Repair, and Operations (MRO) by reducing dependence on OEM licensing and enabling alternative sourcing of parts and services.

2. Improve visibility: Enhance data-sharing across supplier tiers to identify risks early and eliminate bottlenecks.

3. Leverage data: Use predictive maintenance and shared platforms to optimize inventory and minimize downtime.

4. Expand capacity: Support faster repair approvals, greater use of Used Serviceable Material (USM), and advanced manufacturing to increase parts availability.

The study emphasizes that progress requires industry-wide collaboration. “Today’s aircraft are more advanced and efficient than ever,” said Matthew Poitras, Partner at Oliver Wyman. “But current supply challenges affect everyone. Improving performance will demand collective action, transparency, and a renewed focus on talent,” he stressed.

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