Supply Chain Constraints May Cost Airlines More Than US$11 Bln In 2025 - IATA

KUALA LUMPUR, Oct 13 (Bernama) -- The slow pace of production of new aircraft and parts is estimated to cost the airline industry more than US$11 billion (US$1=RM4.22) in 2025, according to the International Air Transport Association (IATA).

In a statement today, the organisation said challenges within the aerospace industry’s supply chain are delaying production, resulting in airlines reevaluating their fleet plans and 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,” it said, citing the findings of a joint study in collaboration with management consulting firm Oliver Wyman.

According to their newly released joint report, “Reviving the Commercial Aircraft Supply Chain”, the estimated cost of over US$11 billion is being driven by four main factors: excess fuel costs due to airlines operating older, less fuel-efficient aircraft (US$4.2 billion); additional maintenance costs (US$3.1 billion); increased engine leasing costs (US$2.6 billion); and surplus inventory holding costs (US$1.4 billion).

In addition to the mounting costs, the report said supply chain challenges inhibit airlines from deploying sufficient aircraft to meet growing passenger demand.

In 2024, passenger demand rose 10.4 per cent, exceeding the capacity expansion of 8.7 per cent and pushing load factors to a record 83.5 per cent, and the trend in rising passenger demand continues into 2025.

IATA director general Willie Walsh said airlines depend on a reliable supply chain to operate and grow their fleets efficiently.

“There is no simple solution to resolving this problem, but 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 original equipment manufacturers (OEMs) to ease underlying bottlenecks,” he added.

-- BERNAMA