Supply chain issues could cost airlines more than $11 billion in 2025

Supply chain issues could cost global airlines more than $11 billion in 2025, according to a joint study from consulting firm Oliver Wyman and the International Air Transport Association (IATA).

The report – “Reviving the Commercial Aircraft Supply Chain” – notes that the projected costs derive from significant delays in the production of new aircraft and parts – with the commercial backlog reaching a record 17,000+ aircraft in 2024.

The slow pace of production traces to the industry’s current economic model, geopolitical instability, raw material shortages, and labor shortages, the report says.

“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,” said Willie Walsh, IATA’s director general.

Short supply of new planes means that airlines are keeping older models flying – leading to estimated costs of $11 billion in 2025. The primary factors are excess fuel costs from using older, less efficient craft ($4.2 billion); additional maintenance cost of using older craft ($2.6 billion); increased engine leasing cost from engines spending more time on the ground during maintenance ($2.6 billion); and surplus inventory holding costs from stocking more parts due to supply chain uncertainty ($1.4 billion).

Additionally, supply chain issues are preventing airlines from deploying a sufficient amount of vehicles to meet passenger demand. In 2024, passenger demand rose 10.4% while capacity expansion was only 8.7% – and the rising passenger demand trend is expected to continue in 2025.

Oliver Wyman says the aerospace industry can take several actions to tackle its supply chain problems. These actions include supporting maintenance, repair, and operations (MROs) firms to be less dependent on OEM-driven commercial licensing models; enhancing supply chain visibility to spot risks early and reduce bottlenecks; using data to drive predictive maintenance and create maintenance platforms for optimizing inventory; expanding repair and parts capacity to speed up repair approvals; and adopting advanced manufacturing to ease bottlenecks.

“There is no simple solution to resolving this problem, but there are several actions that could provide some relief,” Walsh 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.”