IATA: Why Airlines are Facing an US$11bn Cost Surge

Disruption throughout the aerospace supply chain is set to create a cost burden of more than US$11bn for global airlines in 2025.

A joint report from the International Air Transport Association (IATA) and Oliver Wyman has quantified the financial impact of these ongoing issues that stem from production delays and maintenance bottlenecks.

The report, titled Reviving the Commercial Aircraft Supply Chain, identifies these challenges as one of the most urgent problems facing the commercial aviation sector.

The analysis breaks down the source of the rising costs for airlines that are being forced to adapt to an unreliable supply of new aircraft, engines and parts. According to the report, fuel inefficiency from operating older, less-efficient aircraft accounts for around US$4.2bn of the total.

These ageing fleets also require more frequent maintenance, adding a further US$3.1bn. Engine leasing contributes another US$2.6bn as turnaround times for essential shop visits have increased considerably.

Finally, holding larger inventories of spare parts to safeguard against unpredictable availability adds US$1.4bn in costs.

"Airlines depend on a reliable supply chain to operate and grow their fleets efficiently," explains Willie Walsh, IATA’s Director General.

"Now, we have exceptional waits for aircraft, engines and parts and unpredictable delivery schedules. Together, these have sent costs spiralling by at least US$11bn for this year and limited the ability of airlines to meet consumer demand."

Aerospace production backlogs

A key factor of the disruption is constrained aircraft production. The industry is facing a backlog of more than 17,000 commercial aircraft, which is equivalent to approximately 12.7 years of production at current rates.

In 2024, Airbus delivered 766 aircraft and Boeing delivered 348, both falling short of pre-pandemic levels. The average lead time for new aircraft deliveries has stretched to 6.8 years, up from 4.5 years in 2018.

The report notes how the current aerospace economic model puts pressure on original equipment manufacturers (OEMs) to generate a larger share of their profit from aftermarket services like spares and repairs.

"The overall aerospace economic model has resulted in an unbalanced situation where OEMs aim to generate a larger portion of their profitability in the aftermarket," the report states. 

This model can limit an airline's ability to use independent maintenance providers, creating further bottlenecks.

Workforce and material headwinds

The aerospace manufacturing and maintenance sectors are facing numerous overlapping shocks.

These include certification delays, geopolitical instability and constraints on raw materials, particularly titanium and other speciality alloys.

Competition for resources from the defence and business aviation sectors adds another layer of pressure to the commercial aircraft supply chain.

Workforce challenges are also a key factor. The industry is grappling with accelerated retirements and a slow pipeline of new aircraft maintenance technicians (AMTs). According to the report, maintenance labour rates grew by 6.6% in 2024, ahead of the expected 5.8%.

In North America, the shortfall of AMTs reached 17,800 in 2025, and this is projected to increase to 22,000 by 2027. This labour shortage contributes directly to longer lead times for maintenance and repairs, impacting the entire value chain.

Restoring supply chain stability

To improve the situation, the report outlines several actions the industry can take to build resilience. A primary recommendation is to open up the aftermarket to improve access to spares and services.

This includes the greater use of used serviceable material (USM), parts manufacturer approval (PMA) parts and designated engineering repairs (DER), which could help alleviate some of the immediate pressures.

Improving supply chain transparency is also identified as a vital step. Better visibility of delays and backlogs would allow airlines to plan maintenance and leasing more effectively.

The report advocates for mapping multi-tier suppliers and digitising parts tracking to enhance forecasting and reduce delays.

Matthew Poitras, Partner at Oliver Wyman, adds: "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."

Ultimately, greater collaboration between airlines, OEMs, lessors and maintenance providers is required to address the bottlenecks and meet the growing demand for air travel.