IATA Warns of Ongoing Supply Chain Challenges Affecting Airline Performance Through 2025
The International Air Transport Association (IATA) has issued a warning that significant supply chain issues are expected to continue impacting airline performance well into 2025, leading to increased operational costs and constraining growth opportunities for carriers. In its latest airline industry outlook, IATA has quantified the scale of these challenges, painting a concerning picture for the aviation sector.
One of the key indicators of the industry's struggles is the average age of the global fleet, which has now reached a record high of 14.8 years. This is a notable increase from the previous average of 13.6 years for the period spanning 1990 to 2024. Additionally, aircraft deliveries have dramatically declined from a peak of 1,813 aircraft in 2018. The forecast for aircraft deliveries in 2024 is now estimated at 1,254 units, representing a staggering 30% shortfall compared to predictions made at the beginning of the year. Looking ahead to 2025, deliveries are projected to rise to 1,802 aircraft, still significantly below the earlier expectation of 2,293 deliveries, and further downward revisions for 2025 are widely anticipated.
Moreover, the backlog of unfulfilled aircraft orders has escalated to an unprecedented 17,000 planes, marking a record high for the industry. At the current delivery rates, it is expected to take approximately 14 years to address this backlog, which is double the six-year average backlog experienced during the period from 2013 to 2019. However, there is some optimism, as the waiting time for deliveries is anticipated to shorten as delivery rates begin to increase. The number of "parked" aircraft currently stands at 14% of the total global fleet, which translates to roughly 5,000 aircraft out of a total of 35,166 as of December 2024, including those built in Russia. While there has been a recent improvement in this figure, the percentage of parked aircraft remains 4 points higher than pre-pandemic levels, equivalent to about 1,600 aircraft. Among these, 700 planes, or 2% of the global fleet, are parked specifically for engine inspections. This situation is expected to persist into 2025.
Willie Walsh, IATA’s Director General, expressed concerns about the ongoing supply chain challenges, stating, “Supply chain issues are frustrating every airline, presenting a triple whammy on revenues, costs, and environmental performance. Load factors are at record highs, and there is no doubt that if we had more aircraft, they could be profitably deployed, which compromises our revenues. The aging fleet that airlines are currently using incurs higher maintenance costs, consumes more fuel, and requires more capital to keep operational. Additionally, leasing rates have surged beyond interest rates as competition among airlines intensifies, leading to a scramble for every possible means to expand capacity. This is particularly challenging during a time when airlines should be focused on repairing their severely impacted post-pandemic balance sheets, yet progress is effectively stymied by ongoing supply chain issues that manufacturers must address.” IATA has specifically noted that persistent supply chain issues are at least partially responsible for two troubling developments within the industry:
- Fuel efficiency, when excluding the impact of load factors, remained stagnant between 2023 and 2024 at 0.23 liters per 100 available tonne kilometers (ATK). This marks a regression from the long-term trend observed between 1990 and 2019, which typically saw annual fuel efficiency improvements in the range of 1.5% to 2.0%.
- The exceptional demand for leased aircraft has driven leasing rates for narrow-body planes to levels that are 20% to 30% higher than those seen in 2019, further complicating the financial landscape for airlines.
As the industry grapples with these significant challenges, the road ahead appears fraught with uncertainty, underscoring the urgent need for solutions to these supply chain issues that are hampering the airline sector's recovery and growth.
