Effects of Supply Chain Costs on Airlines

We have observed that costs associated with supply chain functions have a significant impact on businesses worldwide. These costs are also impacting transportation carriers. The IATA has noted the considerable loss that airlines are experiencing in 2025 due to the continuing issues in supply chains. The IATA estimates that this amount for 2025 alone will be $11 billion. Many of these costs are due to shortages of parts, delays in manufacturing aircraft, and the expenses associated with maintaining them. It creates a bottleneck with carriers due to threats to their profits, slows down sustainability efforts, and tests the resilience of these carriers.

1. Financial Pressures

Additional costs, including fuel, maintenance, leasing, and backup inventory, contribute to the high expenditure by carriers in 2025. Airlines are having to purchase more fuel than ever since they are keeping older aircraft, which are less fuel-efficient than newer models. With the continuous use of both older and new planes, airlines must ensure that their aircraft are always functioning correctly. The shortages of parts needed, as well as the labor required to perform the services, have also increased. Often, there are delays in these fixes; airlines cannot operate without all their assets, which requires them to lease aircraft to compensate for the one that needs repair, a process that can be more costly for the airline. With the fear of not being able to obtain the necessary parts or components for repairs, airlines have been stockpiling parts to ensure they have what they need on hand in case of an emergency.

2. Causes of Cost Surge

There are currently many problems leading to high costs, creating financial pressure on airlines. It includes the delays in aircraft production, the aging of an airline’s fleet in service, bottlenecks caused by maintenance and repair, pressures in trade/geopolitical, and labor shortages. Since the pandemic, aircraft manufacturers have struggled to meet the demand for new aircraft. They have experienced delays in meeting parts’ needs and a shortage of labor workers to perform the necessary work to complete the plane. With this delay, current airlines must continue using their older aircraft, which require more fuel and maintenance to operate. The turnaround time for parts to complete new aircraft or repair old ones has increased, resulting in longer turnaround times than before. Due to labor shortages and the high demand for aircraft, this has created an impact, as there are not enough people or time to keep up with the workload. The last cause is due to trade and geopolitical issues, including tariffs on raw materials and electronics in aircraft manufacturing.

3. Impacts of Operational and Environmental Factors

The cost pressures are not just influenced from a financial standpoint, but also from an operational and environmental standpoint. Airlines have had to keep some of their fleet out of service while they wait for parts to become available. Without the additional fleet, airlines have had to cut routes or offer additional services/new routes. The use of fuel in older aircraft has led to higher emissions, which hinder airlines’ efforts to reduce emissions and achieve greener goals.

4. Airlines’ Responses

Due to the financial, operational, and sustainability issues mentioned, airlines have had to take specific measures to help ensure they can adapt and remain operational. Airlines have requested and stored a greater inventory, so they have parts readily available for repairs. Many airlines have been utilizing maintenance technology that can predict failures ahead of time and estimate the duration of repairs. Airlines have continued to lease planes to ensure they always have the necessary flexibility. They are building relationships with more suppliers or current suppliers to improve transparency and to coordinate efficiently. Groups in the aviation industry have called for reform to enable competition and help reduce costs.

In conclusion, the outlook for the current situation is likely to be challenging for these airline carriers. They will continue to incur significant costs until the supply chain has had the chance to stabilize. For the future, this has created a lesson for the industries. The lesson being that airlines should diversify their suppliers, plan inventories in advance of any future disruptions, and implement digitalized systems for maintenance.

Contributor: Victoria Tuson 

---

References:

International Air Transport Association (IATA). (2025, October 13). Supply chain challenges could cost airlines more than US$11 billion in 2025. www.iata.org/en/pressroom/2025-releases/2025-10-13-01/

Reuters. (2025, October 13). Airlines face $11 billion supply chain hit in 2025, IATA says. https://www.reuters.com/business/aerospace-defense/airlines-face-11-billion-supply-chain-hit-2025-iata-says-2025-10-13/