The International Air Transport Association (IATA) and Oliver Wyman, a global leader in management consulting and a business of Marsh McLennan, today launched a joint study, Reviving the Commercial Aircraft Supply Chain, revealing that protracted supply chain disruptions are projected to cost the airline industry more than $11 billion in 2025.
The report highlights the severe strain on the aerospace ecosystem, driven by factors including geopolitical instability, raw material shortages, and tight labor markets. These challenges have delayed the production of new aircraft and parts, pushing the worldwide commercial backlog to a historic high of over 17,000 aircraft in 2024. As a result, airlines are forced to extend the service life of older, less efficient aircraft.
The $11 Billion Impact Breakdown
The $11 billion cost estimate for 2025 is primarily driven by four factors directly related to the production slowdown and aging fleet:
- Excess Fuel Costs (~$4.2 billion): Operating older, less fuel-efficient aircraft due to delayed deliveries.
- Additional Maintenance Costs ($3.1 billion): Increased frequency and expense of maintenance required for the global aging fleet.
- Increased Engine Leasing Costs ($2.6 billion): Longer maintenance turnaround times are forcing airlines to lease more engines.
- Surplus Inventory Holding Costs ($1.4 billion): Airlines are stocking more spare parts to mitigate unpredictable supply chain risks.
Beyond rising costs, the lack of aircraft capacity is hindering airlines’ ability to meet soaring passenger demand, which rose 10.4% in 2024, exceeding capacity expansion of 8.7%.
Call for Industry-Wide Action
“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. “Together these have sent costs spiraling by at least $11 billion for this year and limited the ability of airlines to meet consumer demand. 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.”
The joint study outlines a strategic framework for Original Equipment Manufacturers (OEMs), lessors, and suppliers, supported by airlines, focusing on key initiatives to build greater resilience:
- Open Up Aftermarket Best Practices: Reduce dependence on OEM-driven commercial licensing models and facilitate access to alternative sourcing for Maintenance, Repair, and Operations (MRO).
- Enhance Supply Chain Visibility: Create clearer visibility across all supplier levels to spot risks early, reduce bottlenecks, and utilize better data and tools.
- Unlock Value from Data: Leverage predictive maintenance insights, pool spare parts, and create shared maintenance data platforms to optimize inventory and reduce aircraft downtime.
- Expand Repair and Parts Capacity: Accelerate repair approvals, support the use of alternative parts and Used Serviceable Material (USM), and adopt advanced manufacturing techniques.
“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,” said Matthew Poitras, Partner in Oliver Wyman’s Transportation and Advanced Industrials practice. “However, this will require collective steps to reshape the structure of the aerospace industry and work together on transparency and talent.”
The report concludes that developing a strategic, collaborative approach among all commercial aerospace industry participants is the most critical first step toward meeting aircraft production and maintenance demand.
