Aviation industry faces USD 11 billion bottleneck as supply chain revival faces headwinds

October 13, 2025 in Business, Transport, Travel & Tourism by Editor

NEWS ANALYSIS

A new joint report by IATA and Oliver Wyman warns that global aviation is confronting a USD 11 billion cost crisis as aircraft production delays, engine shortages, and maintenance bottlenecks cripple supply chains. With more than 17,000 jets stuck in backlog, airlines are extending fleet life, absorbing surging costs, and struggling to meet record passenger demand.

When the International Air Transport Association (IATA) and global consultancy Oliver Wyman unveiled their new study, Reviving the Commercial Aircraft Supply Chain, in Xiamen this week, the findings read like a post-mortem of an industry under quiet strain. Beneath the record passenger numbers and full flight schedules, the commercial aircraft supply chain, the invisible spine of global aviation, is faltering.

After years of disruption—from pandemic-induced shutdowns to geopolitical instability—the aerospace industry now faces a historic production backlog. More than 17,000 aircraft are waiting to be delivered worldwide, up from an average of 13,000 annually between 2010 and 2019. The result has been a cascading crisis for airlines, which are being forced to extend the life of aging fleets and shoulder spiralling operational costs.

According to the IATA–Oliver Wyman analysis, the global airline industry will absorb more than USD11 billion in extra costs in 2025 alone. The breakdown is telling. Older aircraft, delayed in replacement, are consuming more fuel—adding roughly USD4.2 billion to fuel expenses. Maintenance costs for these aging fleets have surged by another USD3.1 billion, while engine leasing has become a pressure point in its own right. With engines taking longer to service and lease rates up as much as 30 percent since 2019, the industry will pay an additional USD2.6 billion. On top of that, carriers are maintaining bloated inventories of spare parts—an estimated USD1.4 billion worth—to guard against unpredictable supply chain delays.

The net effect is not just financial. Production bottlenecks have limited the ability of airlines to deploy enough aircraft to meet the sharp rebound in passenger demand. In 2024, global traffic grew 10.4 percent while capacity rose only 8.7 percent, pushing average load factors to an all-time high of 83.5 percent. This imbalance has implications beyond scheduling and fares: it reflects an industry running close to its physical limits.

At the heart of the problem lies a confluence of systemic weaknesses. The current aerospace economic model, characterised by tightly controlled aftermarket licensing, has created dependence on a handful of original equipment manufacturers (OEMs). Add to that the lingering effects of raw material shortages, tight labour markets, and global geopolitical friction, and the industry’s recovery has become a delicate balancing act.

According to IATA’s Director General, Willie Walsh, the solution begins with structural transparency. “Airlines depend on a reliable supply chain to operate and grow their fleets efficiently,” he observed. “Now we have unprecedented waits for aircraft, engines, and parts—and unpredictable delivery schedules. Together these have sent costs spiralling by at least USD11 billion this year and limited the ability of airlines to meet consumer demand.”

Walsh argued that opening the aftermarket could offer some relief by giving carriers greater access to parts and services outside the OEM-controlled sphere, while better visibility across supplier tiers would enable airlines and manufacturers alike to plan around bottlenecks.

The report calls for a collective industry rethink—a coordinated effort to improve supply chain visibility, expand repair capacity, and leverage data in smarter ways. Predictive maintenance and shared data platforms could transform how fleets are serviced, reducing both downtime and inventory costs. Likewise, expanding the capacity to repair and certify parts, including used serviceable materials, could alleviate the choke points that currently slow production.

Yet, as Oliver Wyman’s Matthew Poitras notes, progress will hinge on collaboration and talent as much as technology. “Today’s aircraft fleet is larger, more advanced, and more fuel efficient than ever before,” he said. “However, supply chain challenges are impacting airlines and OEMs alike. We see an opportunity to catalyse an improvement in supply chain performance that will benefit everyone, but this will require collective steps to reshape the structure of the aerospace industry and work together on transparency and talent.”

What the IATA–Oliver Wyman report ultimately underscores is that the global aviation recovery is now being tested not by demand but by production. The bottleneck is no longer at the airport but in the factory—and unlocking it will determine whether airlines can meet the next decade’s growth with resilience rather than improvisation.