Airlines face $11 billion supply chain hit in 2025, IATA says

Core Insights - Global airlines are projected to incur over $11 billion in additional costs due to supply chain disruptions in 2023, highlighting significant challenges in the $250 billion aerospace industry [1][2] - The International Air Transport Association (IATA) has quantified the impact of a five-year supply chain crisis, which has resulted in increased fares and flight cancellations [2][4] - IATA's Director General, Willie Walsh, expressed surprise at the findings and suggested a potential revisit of anti-competitive practices by suppliers [2][6] Cost Breakdown - The largest cost impact is attributed to $4.2 billion in extra fuel expenses as airlines continue to operate older aircraft [4] - Additional maintenance costs are estimated at $3.1 billion, while leasing engines to replace those in maintenance queues adds another $2.6 billion [4] - Airlines are projected to spend $1.4 billion on holding more spare parts to mitigate delays [4] Supply Chain Challenges - The aerospace industry is facing setbacks including labor, material, and parts shortages, along with delays at repair shops, particularly for engines [5] - There is increasing competition for capacity with the defense industry as military spending rises, indicating that supply chain issues will persist throughout the decade [5] Market Competition - Walsh raised concerns about the influence of suppliers on parts pricing and called for increased competition in the aftermarket, which has seen significant consolidation [6] - IATA has previously advocated for greater competition in maintenance and improved access to independent parts [6] - Although no new challenges are currently planned against suppliers, the possibility remains open for future evaluations [7]