The International Air Transport Association (IATA) has warned that “severe” supply chain disruptions will continue to challenge the airline industry through 2025.
Key issues include ageing aircraft fleets, reduced delivery rates, and heightened leasing costs, which risk inflating costs and limiting growth prospects.
IATA did not mention the manufacturing issues plaguing Boeing, although they are undoubtedly playing a part.
Delays to Boeing shipments have already hurt Irish budget airline Ryanair Holdings PLC (LSE:RYA)’s revenue take.
“Aircraft deliveries have fallen sharply from the peak of 1,813 aircraft in 2018,” said IATA. “The estimate for 2024 deliveries is 1,254 aircraft, a 30% shortfall on what was predicted going into the year.
“In 2025, deliveries are forecast to rise to 1,802, well below earlier expectation for 2,293 deliveries with further downward revisions in 2025 widely seen as quite possible.”
Willie Walsh, IATA’s director general, added: “Supply chain issues are frustrating every airline with 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, so our revenues are being compromised.
“Meanwhile, the ageing fleet that airlines are using has higher maintenance costs, burns more fuel, and takes more capital to keep it flying.”
The global fleet’s average age has climbed to 14.8 years, marking a significant rise from historical averages.
Airline revenues to surge
Supply-chain issues aside, IATA anticipates a strong year for airline revenues.
The association projects airline industry revenues will surpass $1 trillion in 2025, driven by top-line growth and declining fuel prices.
Jet fuel prices are expected to decline to $87 per barrel in 2025, down significantly from $139 in 2022. As fuel accounts for 30% of airline costs, this reduction is expected to alleviate cost pressures and support profitability.
Robust passenger demand, supported by moderate ticket prices and economic stability, is expected to drive growth.