IATA Warns Supply Chain Challenges Will Limit Airlines’ Capacity Growth in 2025

The International Air Transport Association (IATA) recently warned that severe supply chain disruptions will continue to hinder airlines’ efforts to expand capacity and improve fuel efficiency in 2025.

According to the association, these disruptions, exacerbated by delayed aircraft deliveries and a record backlog of orders, are limiting airlines’ ability to meet their environmental goals.

The association highlighted that delays from manufacturers are hindering the progress towards a more fuel-efficient fleet, thus compromising both environmental and financial recovery for airlines.

“Airlines are forced to keep flying older airplane models, which negatively affects fuel efficiency and increases maintenance costs,” IATA said in its latest airline industry outlook.

Key challenges

In its outlook, IATA identified key challenges airlines are facing because of supply chain issues, including:

– A record-high average fleet age of 14.8 years, which reflects the struggles with prolonged delivery delays.
– Aircraft deliveries in 2024 are expected to fall 30 percent short of earlier predictions, with only 1,254 new planes delivered compared to the 1,813 peak in 2018.
– The backlog for new aircraft has soared to 17,000, doubling pre-pandemic levels, with current delivery rates requiring 14 years to fulfill the orders.
– A 14 percent parked aircraft rate, including 700 planes sidelined for engine inspections, further exacerbates operational challenges.

Moreover, high demand for leased aircraft has pushed leasing rates 20–30 percent above 2019 levels, straining airlines’ capacity expansion efforts. The ongoing supply chain issues have also stalled improvements in fuel efficiency, a significant setback for the aviation sector’s net-zero carbon goals by 2050.

“Manufacturers are letting down their airline customers, and this is directly slowing efforts to reduce carbon emissions,” said IATA Director General Willie Walsh. “If the aircraft and engine manufacturers could resolve their issues, we’d have a more fuel-efficient fleet in the air.”

IATA expects strengthened profitability despite ongoing supply chain issues

Despite ongoing supply chain disruptions, IATA forecasts a relatively strong profit for the air transport industry in 2024. Airlines are projected to report a net profit of USD $31.5 billion, with a modest 3.3 percent profit margin. In 2025, IATA expects airlines’ revenues to exceed $1 trillion, with a record net profit of $36.6 billion, though the profit margin will remain low at 3.6 percent.

According to the association, while profitability is expected to rise due to higher revenues and lower fuel prices, airlines will continue to face rising costs from wage increases, higher operating expenses (due in part to longer routes), and challenges with older aircraft.

“These factors will limit airlines’ ability to fully capitalize on growth opportunities,” IATA said.