Supply chain challenges are one of the most pressing issues facing the commercial aviation industry today, with airlines waiting longer for both aircraft and parts. As a result, airlines have been forced to reevaluate fleet plans and, in many cases, keep older aircraft flying longer, which has created even more complications in the aftermarket.
By our estimate, these challenges could cost the airline industry more than $11 billion in 2025, driven by a mix of delayed fuel cost savings, higher maintenance costs, and increased spares inventory. But this represents only a portion of the economic and operational impacts facing the aviation industry due to supply chain challenges; other effects include delayed expansion of service, impacted aircraft and asset lease rates, and prolonged operational disruptions.
In our latest flight operations report, "Reviving The Commercial Aircraft Supply Chain," produced in collaboration with the International Air Transport Association (IATA), we provide a detailed look at the current structure of aircraft supply chain — key challenges and their root causes, impacts on airlines, and some potential actions for moving the industry forward.
Aircraft backlog reaches a new high as airlines delay fleet removal
The aircraft market has not quite fully recovered to its pre-pandemic size but is on track to do so by 2027. The problem? The highly consolidated, tiered structure of the commercial aircraft industry has found it difficult to absorb multiple recent and overlapping market shocks — from the disarray caused by the COVID-19 pandemic to geopolitical conflict-driven material shortages and tight labor markets.
As a result, airlines are waiting for new aircraft with lower fuel consumption, while facing higher maintenance and repair costs for an aging fleet. The worldwide commercial aircraft backlog reached a high of more than 17,000 aircraft in 2024, significantly higher than the 2010-2019 backlog of around 13,000 aircraft per year (Exhibit 1). The current backlog is equivalent to approximately 14 years of production at current rates. This bottleneck is forcing airlines to extend the operational life of their current fleet, as well as delaying fleet renewal and, in some cases, expansion plans.
Industry structure adding to aerospace supply chain challenges
The current commercial aerospace industry structure began to take form in the 1980s, evolving through waves of consolidation in successive decades. As a result, many aircraft components are now sole sourced. The maintenance, repair, and overhaul (MRO) supply chain has consolidated as well, with original equipment manufacturers (OEMs) aiming to increasingly participate in the engine and component aftermarkets.
Ongoing aviation industry challenges, from widespread supply chain volatility and price increases to aircraft and parts delivery delays, are being exacerbated by the current structure of the aircraft production and aftermarket supply chains and their associated business models.
Root causes of supply chain friction in aerospace
The root causes of current supply chain challenges center on three main issues. The first is that the overall aerospace economic model has resulted in an unbalanced situation where OEMs must seek to generate a larger portion of their profitability in the aftermarket (repairs and spare parts) versus new equipment sales.
A second issue is supply chain disruption, including geopolitical instability, raw material shortages, and greater demand for military/business jets, which share supply chain touchpoints with commercial aircraft. A series of overlapping global crises in recent years have slowed investment in new capacity, making it more difficult for the aerospace industry to climb out.
Finally, the aerospace industry is being deeply constrained by tight labor markets. As a large wave continues of older workers retiring, industry participants are struggling to recruit, retain, and train sufficient skilled workers from younger generations.
Economic impact of supply chain disruption on airlines
Although supply chain challenges affect airlines in various ways, we have identified four primary impacts that together could cost airlines more than $11 billion in 2025. These include delayed fuel efficiency, which could cost $4.2 billion as airlines continue operating older, less efficient aircraft while waiting for new deliveries. Additional maintenance costs are estimated at $3.1 billion, driven by the upkeep of aging fleets. Excess engine leasing costs may reach $2.6 billion, as more engines are leased to compensate for longer maintenance turnaround times. Finally, airlines are expected to incur $1.1 billion in excess inventory holding costs due to increased spare parts stockpiling in response to unpredictable supply.
Industry actions to build long-term resilience in aerospace supply chain
While there is no quick fix for the problems the commercial aerospace industry faces, we believe there are steps that airlines, OEMs, lessors, and suppliers can take to begin addressing the current supply-demand imbalance and build in greater resilience for the future. Some of these include:
Ramp up collaboration to improve schedule and planning stability and early insight into supply chain problems, as well as to develop early warning and joint contingency planning tailored to specific risk areas.
Improve supply chain insight through end-to-end supply chain mapping and visibility, thus revealing potential bottlenecks and hidden risks. This also could enable better collaboration and innovation, such as the integration of digital tools for real-time track and trace.
Better leverage inventory and maintenance data. Airlines possess a wealth of data and could leverage it for virtual "parts pooling" to optimize parts access and inventory, as well as to develop improved predictive tools.
Expand maintenance and parts supply by increasing the ability to repair materials, and the use of parts manufacturer approval (PMA) arrangements and used serviceable materials (USM) to free up production capacity so that it can focus on critical parts in short supply.
Support the current and future workforce through innovation in training, incentives, and recruiting. The five generations now in the workforce have different learning styles, technology exposure, and work-life values — workforce programs and outreach efforts need to recognize this.
We believe that present commercial aerospace supply chain challenges are not intractable. A broader, united industry response that is more proactive, flexible, and strategic could help all participants better prepare for and be ready to respond to supply chain threats, while ramping up efficiency and driving down costs over the long term.
