Supply chain issues to cost airlines over $11 billion in 2025

Investing.com -- The International Air Transport Association (IATA) and Oliver Wyman released a joint study Monday revealing that supply chain challenges in the aerospace industry could cost airlines more than $11 billion in 2025.

The report, titled "Reviving the Commercial Aircraft Supply Chain," highlights how production delays of new aircraft and parts are forcing airlines to reevaluate fleet plans and keep older aircraft in service longer.

The worldwide commercial backlog reached a historic high of more than 17,000 aircraft in 2024, significantly higher than the 2010-2019 average of around 13,000 aircraft per year.

The $11 billion in additional costs stems from four main factors: excess fuel costs of approximately $4.2 billion as airlines operate older, less fuel-efficient aircraft; additional maintenance costs of $3.1 billion due to an aging global fleet; increased engine leasing costs of $2.6 billion; and surplus inventory holding costs of $1.4 billion as airlines stock more spare parts.

These challenges are also limiting airlines’ ability to meet growing passenger demand. In 2024, passenger demand rose 10.4%, exceeding capacity expansion of 8.7% and pushing load factors to a record 83.5%. This trend of 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 report outlines several actions for the aerospace industry to consider, including opening up aftermarket best practices, enhancing supply chain visibility, unlocking value from data, and expanding repair and parts capacity.

Matthew Poitras, Partner in Oliver Wyman’s Transportation and Advanced Industrials practice, noted, "Today’s aircraft fleet is larger, more advanced, and more fuel efficient than ever before. However, 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."