Global airlines are bracing for more than $11 billion in additional costs this year due to ongoing supply chain disruptions, according to a report released by the International Air Transport Association (IATA) on Monday.
The study, developed in collaboration with consultancy firm Oliver Wyman, represents the first comprehensive attempt to measure the financial toll of a five-year crisis that has driven up airfares and triggered widespread flight cancellations.
IATA Director General Willie Walsh expressed surprise at the magnitude of the findings, suggesting that the industry may need to revisit concerns about anti-competitive practices among suppliers.
“Even if you halve the number, it’s still a massive drag on the industry,” he said in an interview with Reuters.
The report found that airlines are facing $4.2 billion in additional fuel expenses as they keep older aircraft in operation due to production delays.
Maintenance costs are expected to rise by $3.1 billion, while leasing engines to replace those awaiting repair will add another $2.6 billion. Furthermore, maintaining larger inventories of spare parts to manage supply delays will cost an estimated $1.4 billion.
Aircraft manufacturers and suppliers have been grappling with persistent shortages of skilled labor, materials, and parts, leading to severe delays, particularly in engine repair facilities.
This strain has been compounded by increased demand from the defence sector as governments boost military spending. “There’s now going to be continuing competition for the limited supply that is there,” Walsh warned, predicting that supply chain issues will persist throughout the decade.
He also questioned the dominance of major suppliers and urged for “additional competition in the aftermarket, which clearly has seen significant consolidation.”
The IATA has long advocated for greater competition in maintenance and parts supply, including wider access to independent components known as Parts Manufacturer Approval (PMA).
In 2016, it filed a complaint with the European Union against CFM International, later withdrawn in 2018 after the engine maker agreed to ensure an open and competitive market.
A similar agreement was reached with Rolls-Royce in 2021. Walsh said IATA currently has no plans to reopen formal challenges but acknowledged the issue remains under review.
“We have been evaluating it, but we’d have to do a lot more work,” he said, noting that investigating potential anti-competitive practices is a complex legal process due to confidentiality agreements between airlines and suppliers.
The widening profit gap between airlines and suppliers has become another flashpoint. While airline operating margins are forecast at 6.7% this year, some engine makers and component suppliers are reporting margins in the mid-20s.
“How is it that they can make such massive margins from an industry that makes margins that are wafer-thin? It just doesn’t add up,” Walsh remarked.
Engine manufacturers, however, argue that such returns are justified by the high costs and risks associated with developing new technologies and offering long-term service contracts.
According to IATA, airlines are projected to spend $120 billion on maintenance and repair in 2025, with the figure expected to reach $150 billion by 2030.
Despite previous criticism, Walsh softened his stance toward major aircraft manufacturers, acknowledging that Airbus and Boeing have become ‘more transparent’ about delays in jet deliveries. In June, he had accused both planemakers of “failing badly” in meeting industry needs.
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