The aerospace industry faces unprecedented supply chain challenges, delaying aircraft production and inflating costs for airlines worldwide.
A recent joint study has been completed by the International Air Transport Association (IATA) and Oliver Wyman, a leading management consulting firm. Titled “Reviving the Commercial Aircraft Supply Chain“, the study investigates these issues.
The report pinpoints the root causes, assesses their impact on airlines, and proposes actionable solutions to strengthen the aviation sector.
The Supply Chain Crisis
Supply chain disruptions are slowing the production of new aircraft and parts, forcing airlines to rethink fleet strategies.
Many are extending the use of older, less efficient planes to meet demand. In 2024, the global commercial aircraft backlog hit a record 17,000 planes, far surpassing the 13,000 annual average from 2010 to 2019.
These delays are costly, with the airline industry projected to lose over $11 billion in 2025 due to four key factors:
Higher Fuel Costs ($4.2 billion): Delays in new aircraft deliveries mean airlines rely on older, fuel-hungry planes, driving up fuel expenses.
Rising Maintenance Costs ($3.1 billion): Aging fleets require more frequent and costly maintenance, straining budgets.
Increased Engine Leasing Costs ($2.6 billion): With engines grounded longer for repairs, airlines face higher leasing costs. Aircraft lease rates have also surged 20–30% since 2019.
Surplus Inventory Costs ($1.4 billion): To counter unpredictable supply chains, airlines are stockpiling spare parts, increasing inventory expenses.
These challenges also limit airlines’ ability to meet soaring passenger demand. In 2024, demand grew by 10.4%, outpacing capacity expansion of 8.7%, resulting in record-high load factors of 83.5%. This trend is expected to continue into 2025, putting further pressure on the industry.
Root Causes of the Problem
Several factors contribute to the supply chain crisis. The aerospace industry’s economic model, coupled with geopolitical instability, raw material shortages, and tight labor markets, creates a perfect storm.
These issues disrupt the supply-demand balance, leaving airlines and manufacturers struggling to keep up.
Willie Walsh, IATA’s Director General, emphasizes the severity. “Airlines depend on a reliable supply chain to operate and grow efficiently.”
“Unprecedented waits for aircraft, engines, and parts, along with unpredictable delivery schedules, have sent costs spiraling by at least $11 billion this year. These issues also limit airlines’ ability to meet consumer demand.”
Walsh acknowledges there’s no quick fix but suggests practical steps to ease the strain.
Proposed Solutions
The IATA-Oliver Wyman report outlines several initiatives to address the crisis, focusing on collaboration among original equipment manufacturers (OEMs), lessors, suppliers, and airlines. Key recommendations include:
Open the Aftermarket: Encourage Maintenance, Repair, and Operations (MRO) to rely less on OEM-driven licensing models. Facilitating access to alternative parts and services can give airlines more flexibility and reduce costs.
Improve Supply Chain Visibility: Enhance transparency across all supplier levels to identify risks early. Better data and tools can help spot bottlenecks, reduce inefficiencies, and build a more resilient supply chain.
Leverage Data Insights: Use predictive maintenance, shared spare parts pools, and collaborative data platforms to optimize inventory and minimize downtime. Data-driven strategies can unlock significant value for airlines and suppliers.
Expand Repair and Parts Capacity: Speed up repair approvals, promote alternative parts, and adopt advanced manufacturing techniques like Used Serviceable Material (USM) solutions to alleviate bottlenecks.
The Path to Resilience
Implementing these solutions requires a unified approach. Stakeholders across the aerospace supply chain must work together to address these complex challenges.
Matthew Poitras, a partner at Oliver Wyman, notes, “Today’s aircraft fleet is larger, more advanced, and more fuel-efficient than ever.”
“However, supply chain issues impact airlines and OEMs alike. Improving performance will require collective steps to reshape the industry’s structure, enhance transparency, and address talent shortages.”
Collaboration is the cornerstone of progress. By opening the aftermarket, improving visibility, leveraging data, and expanding capacity, the industry can better meet production and maintenance demands.
These efforts will not only reduce costs but also ensure airlines can keep pace with growing passenger needs.
Looking Ahead
The aerospace industry now stands at a critical juncture. Supply chain disruptions pose significant financial and operational challenges, but they also present an opportunity for transformation.
By adopting the report’s recommendations, stakeholders can build a more resilient and efficient supply chain.
Airlines, OEMs, and suppliers must act swiftly to address these issues, ensuring the industry can meet demand while keeping costs in check.
