Supply chain challenges could cost airlines more than $11 billion in 2025
The International Air Transport Association (IATA) says “the slow pace of production is estimated to cost the airline industry more than $11 billion in 2025.” IATA notes further that “challenges within the aerospace industry’s supply chain are delaying production of new aircraft and parts, resulting in airlines reevaluating their fleet plans and, in many cases, keeping older aircraft flying for extended amounts of time.”
The report, produced in collaboration with Oliver Wyman is the product of “a joint study, Reviving the Commercial Aircraft Supply Chain”, notes that the slow-paced production is driven by four main factors namely: “Excess fuel costs (~$4.2 billion), Additional maintenance costs ($3.1 billion), Increased engine leasing costs ($2.6 billion) and Surplus inventory holding costs ($1.4 billion).”
According to the report “worldwide commercial backlog reached a historic high of more than 17,000 aircraft in 2024, significantly higher than the 2010 to 2019 backlog of around 13,000 aircraft per year”
In addition to the mounting costs, IATA says: “supply chain challenges inhibit airlines from deploying sufficient aircraft to meet growing passenger demand. In 2024, passenger demand rose 10.4%, exceeding the capacity expansion of 8.7% and pushing load factors to a record 83.5%. The trend in rising passenger demand continues into 2025.”
Willie Walsh, IATA’s Director General said: “Airlines depend on a reliable supply chain to operate and grow their fleets efficiently. Now we have unprecedented waits for aircraft, engines and parts and unpredictable delivery schedules. Together these have sent costs spiralling by at least $11 billion for this year and limited the ability of airlines to meet consumer demand.”
The IATA DG states there are several actions that could provide some relief. “To start, opening the aftermarket would help by giving airlines greater choice and access to parts and services. In parallel, greater transparency on the state of the supply chain would give airlines the data they need to plan around blockages while helping OEMs to ease underlying bottlenecks” he said.
The report recommends actions for the aerospace industry to consider including:
Open up aftermarket best practices by supporting MROs to be less dependent on OEM-driven commercial licensing models, as well as facilitating access to alternative sourcing of materials and services.
Enhance supply chain visibility by creating clearer visibility across all supplier levels to spot risks early, reduce bottlenecks and inefficiencies, and use better data and tools to make the whole chain more resilient and reliable.
Unlock value from data by leveraging predictive maintenance insights, pooling spare parts, and creating shared maintenance data platforms to optimize inventory and reduce downtime.
Expand repair and parts capacity to accelerate repair approvals, support alternative parts and Used Serviceable Material (USM) solutions, and adopt advanced manufacturing to ease bottlenecks.
Matthew Poitras, Partner in Oliver Wyman’s Transportation and Advanced Industrials practice said: “supply chain challenges are impacting airlines and OEMs alike. We see an opportunity to catalyze an improvement in supply chain performance that will benefit everyone, but this will require collective steps to reshape the structure of the aerospace industry and work together on transparency and talent.”
