Supply chain challenges to cost airlines $11 billion

The International Air Transport Association (IATA) in collaboration with Oliver Wyman, a global leader in management consulting and a business of Marsh McLennan launched a joint study, Reviving the Commercial Aircraft Supply Chain (link). The report addresses supply chain challenges in the aerospace industry, and explores the root cause of these challenges, the impact on airlines, and initiatives to move the aviation industry forward.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 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.The slow pace of production is estimated to cost the airline industry more than $11 billion in 2025, driven by four main factors:Excess fuel costs (~$4.2 billion): Airlines are operating older, less fuel-efficient aircraft because new aircraft deliveries are delayed, leading to higher fuel costs.Additional maintenance costs ($3.1 billion): The global fleet is aging, and older aircraft require more frequent and expensive maintenance.Increased engine leasing costs ($2.6 billion): Airlines need to lease more engines since engines spend longer on the ground during maintenance. Aircraft lease rates have also risen by 20–30% since 2019. Surplus inventory holding costs ($1.4 billion): Airlines are stocking more spare parts to mitigate unpredictable supply chain disruptions, increasing inventory costs. In addition to the mounting costs, 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. The current aerospace industry economic model, disruptions from geopolitical instability, raw material shortages and tight labor markets all contribute to the origin of the matter. With these underlying causes considered, the report outlines key initiatives for original equipment manufacturers (OEMs), lessors, and suppliers supported by airlines to confront the supply-demand imbalance and build greater resilience. “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. There is no simple solution to resolving this problem, but there are several actions that could provide some relief,” Willie Walsh, IATA’s director-general said. 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,” Walsh added. There are actions for the aerospace industry to consider: 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. To enact any of these initiatives, the first and most critical step for commercial aerospace industry participants to take is to develop a strategic approach among all stakeholders in the supply chain. The multi-headed challenges facing the industry call for collaboration to progress in the goal of better meeting aircraft production and maintenance demand. “Today’s aircraft fleet is larger, more advanced, and more fuel efficient than ever before,” said Matthew Poitras, Partner in Oliver Wyman’s Transportation and Advanced Industrials practice. “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, but this will require collective steps to reshape the structure of the aerospace industry and work together on transparency and talent.”

Supply chain challenges to cost airlines $11 billion

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Namibian Sun 2026-03-26

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Supply chain challenges to cost airlines $11 billion

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Namibian Sun 2026-03-26

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