Global airlines could face more than $11 billion in extra costs in 2025 as prolonged aerospace supply-chain disruptions force carriers to keep older planes flying, pay more for maintenance, lease additional engines and stockpile spares, the International Air Transport Association (IATA) said in a study with consultants Oliver Wyman. Reuters covered the findings and interviewed IATA Director General Willie Walsh, who warned the sector should consider whether aftermarket competition is adequate.
IATA’s report, Reviving the Commercial Aircraft Supply Chain, breaks the $11bn figure into four main components: an estimated $4.2bn in lost fuel savings (from operating older, less fuel-efficient aircraft); $3.1bn in extra maintenance; $2.6bn in engine leasing to cover extended shop visits; and $1.4bn tied to higher inventory holdings. The study links these costs to delivery backlogs, labour shortages, parts bottlenecks and heightened defence demand for industrial capacity.
Key findings and why they matter
- Delayed fuel savings, $4.2bn: Delivery shortfalls force airlines to operate older aircraft with higher fuel burn, increasing fuel spend despite lower jet-fuel prices compared with pandemic peaks.
- Higher maintenance, $3.1bn: An ageing active fleet needs more frequent, costly maintenance as repair shops face long queues.
- Engine leasing uplift, $2.6bn: Engines spend longer in overhaul, raising demand (and prices) for leased powerplants.
- Inventory holding, $1.4bn: Airlines build spare inventories to hedge against shortages, tying up working capital.
Backlog, demand and competition
IATA and industry data show a historic production backlog, more than 17,000 commercial aircraft held in 2024 backlog terms, and sustained passenger demand that outstrips capacity growth. Passenger traffic rose strongly in 2024 (IATA cited a 10.4% increase in demand that year), putting pressure on available capacity and incentivising airlines to keep older types flying while they wait for deliveries.
Willie Walsh told Reuters he was surprised by the magnitude of the cost impact and said the findings justify re-examining aftermarket competition, noting a wide margin gap between airlines (operating margins ~6.7%) and some engine/supplier margins (mid-20s percent), which raises questions about market power and pricing dynamics in maintenance and spares. He said IATA had dropped an earlier complaint in 2018 after manufacturer commitments but would consider further work now.
Industry responses and counterpoints
- Manufacturers and engine makers argue that high margins reflect R&D risk and capital intensity required to develop and support complex engines and systems. Reuters notes that IATA softened earlier criticisms of Airbus and Boeing as they improve delivery transparency, indicating a mix of tension and cooperation between airlines and OEMs.
- Operational impact: Airlines worldwide are juggling route plans, leasing strategies and crew training schedules to cope with constrained fleets. Lessors and MRO providers face heightened demand for inventory and shop slots, while governments face pressure to expand training and industrial capacity.
Timeline & quick impacts
- 2024: Commercial backlog tops 17,000 aircraft; passenger demand rises ~10.4%.
- 2025: IATA/Oliver Wyman estimate >$11bn in extra airline costs due to supply-chain disruptions.
- Near term impacts: Higher ticket prices and occasional cancellations where capacity shortfalls occur; increased leasing and inventory costs for airlines and higher utilization for MRO facilities.
Policy implications and industry options
IATA recommends industry and policymakers consider a multi-pronged response: increase competition in the aftermarket (including wider use of PMA parts where safe and certificated), expand MRO capacity, incentivise supply-chain investments, and improve transparency on delivery schedules. Any legal or regulatory probe into anti-competitive conduct would require careful evidence given the complex web of commercial contracts and confidentiality clauses that bind many airline-supplier relationships.
Regulatory bodies (FAA, EASA, national aviation authorities) and trade offices may monitor the situation; however, formal anti-trust action would need further investigation beyond IATA’s call to review market structure.
What’s next? Industry outlook
- Short term (weeks–months): Watch for IATA follow-up policy papers, Oliver Wyman briefings, and comments from major engine makers (GE, Pratt & Whitney, Rolls-Royce) on shop capacity and leasing. Airlines and lessors could announce contingency lease deals to cover immediate capacity shortfalls.
- Medium term (6–24 months): Expect investments in MRO expansion, increased appetite from independent spares manufacturers (PMA producers), and potential shifts in airline fleet strategies (more short-term leasing, deferred expansion).
- Long term: If supply-chain resilience improves and delivery backlogs reduce, the $11bn drag could abate; failure to remedy the bottlenecks risks sustained higher fares and slower network expansion in developing markets.
Sources & further reading (load-bearing)
- Reuters, Airlines face $11 billion supply chain hit in 2025, IATA says, Tim Hepher & Joanna Plucinska, 13 Oct 2025.
- IATA press release & study, Supply Chain Challenges Could Cost Airlines More than $11 Billion in 2025 (IATA / Oliver Wyman), 13 Oct 2025.
- Aviation Week, coverage of IATA findings and supply chain context.
- Trade and industry commentaries summarising report implications (AVweb, SupplyChainDigital).
