The International Air Transport Association (IATA) warns aircraft availability remains a significant constraint on industry growth as delivery shortfalls reach 5,300 aircraft. Willie Walsh, IATA Director General, stated December 9 in Geneva that airlines face higher leasing costs, reduced scheduling flexibility and delayed sustainability gains due to aerospace supply chain bottlenecks.
New aircraft deliveries began to increase in late 2025 and production is expected to accelerate in 2026, but demand will outstrip the availability of aircraft and engines according to IATA analysis. The normalization of the structural mismatch between airline requirements and production capacity is unlikely before 2031 to 2034 due to irreversible losses on deliveries over the past five years and a record high order backlog. The order backlog has surpassed 17,000 aircraft, a number equal to almost 60 percent of the active fleet compared to the historical ratio of 30 to 40 percent.
A recent study by IATA and Oliver Wyman estimated that supply chain bottlenecks will cost the airline industry more than 11 billion United States dollars (USD) in 2025 driven by four main factors. Excess fuel costs reach approximately 4.2 billion USD as airlines operate older and less fuel efficient aircraft because new aircraft deliveries are delayed. Additional maintenance costs total 3.1 billion USD as the global fleet ages and older aircraft require more frequent and expensive maintenance. Increased engine leasing costs amount to 2.6 billion USD because airlines need to lease more engines since engines spend longer on the ground during maintenance while aircraft lease rates have also risen by 20 to 30 percent since 2019.
The average fleet age has risen to 15.1 years including 12.8 years for aircraft in the passenger fleet, 19.6 years for cargo aircraft and 14.5 years for the wide body fleet. Aircraft in storage for all reasons exceed 5,000 aircraft, one of the highest levels in history despite the severe shortage of new aircraft. This backlog is equivalent to nearly 12 years of the current production capacity at present delivery rates.
Delivery delays are compounded by several factors according to IATA analysis. Airframe production is outpacing engine production which is constrained due to issues with existing engines, resulting in newly completed airframes being parked until engines are available. Longer timelines for new aircraft certification from 12 to 24 months to four or even five years are delaying entry into production and service, particularly impacting long haul fleet renewal. Tariffs on metals and electronics resulting from United States (US) to China trade tensions have worsened some supply bottlenecks and raised some maintenance costs.
A shortage of skilled labor especially in engine and component manufacturing is constraining production ramp up plans. The fragility of the aerospace supply chain network often reliant on a limited number of suppliers for critical parts can become an acute constraint amid economic uncertainty, changing tariff regimes and tight labor markets. Even small disruptions can be difficult to resolve and balloon to significant production delays according to the industry assessment.
Fuel efficiency improvements are slowing as the fleet ages. Historically, fuel efficiency improved by 2.0 percent per year but this slowed to 0.3 percent in 2025 and is projected at 1.0 percent for 2026. The situation for the air cargo fleet risks evolving as converted aircraft from passenger operations are in short supply because airlines keep them in use for passenger operations longer while new build wide bodies face production delays.
Walsh emphasized that airlines are missing opportunities to strengthen their top line, improve their environmental performance and serve customers while travelers are seeing higher costs from the resulting tighter demand and supply conditions. Meanwhile travelers are seeing higher costs from the resulting tighter demand and supply conditions according to Walsh’s statement. Airlines are feeling the impact across their business with increased reliance on suboptimal aircraft types among the most obvious challenges.
The study pointed to several considerations to help expedite solutions. Opening up aftermarket best practices by supporting Maintenance, Repair and Operations (MRO) to be less dependent on Original Equipment Manufacturer (OEM) driven commercial licensing models as well as facilitating access to alternative sourcing for materials and services. Enhancing supply chain visibility by creating clearer visibility across all supplier levels to spot risks early, reduce bottlenecks and inefficiencies and use better data and tools to make the whole chain more resilient and reliable.
Using data more extensively in leveraging predictive maintenance insights, pooling spare parts and creating shared maintenance data platforms to optimize inventory and reduce downtime. Expanding repair and parts capacity to accelerate repair approvals, support alternative parts and Used Serviceable Material (USM) solutions and adopt advanced manufacturing to ease bottlenecks. Surplus inventory holding costs total 1.4 billion USD as airlines are stocking more spare parts to mitigate unpredictable supply chain disruptions, increasing inventory costs.
Matthew Poitras, Partner in Oliver Wyman’s Transportation and Advanced Industrials practice, stated that collective steps are needed to reshape the structure of the aerospace industry and work together on transparency and talent. The current aerospace industry economic model, disruptions from geopolitical instability, raw material shortages and tight labor markets all contribute to the origin of the matter. Passenger demand rose 10.4 percent in 2024, exceeding the capacity expansion of 8.7 percent and pushing load factors to a record 83.5 percent.
Walsh served as Chief Executive Officer (CEO) of British Airways from 2005 to 2011 and CEO of International Airlines Group from 2011 until September 2020 before becoming IATA’s eighth Director General in April 2021. IATA represents approximately 360 airlines comprising over 80 percent of global air traffic. Oliver Wyman is a business of Marsh McLennan with annual revenue of over 24 billion USD and more than 90,000 colleagues worldwide.
