The International Air Transport Association (IATA) expects severe supply chain issues to continue to impact airline performance into 2025, raising costs and limiting growth. IATA quantified the scale of the challenges facing airlines because of supply chain issues in its latest airline industry outlook.
The association said the average age of the global fleet has risen to a record 14.8 years, a significant increase from the 13.6 years average for the period 1990-2024. Aircraft deliveries have fallen sharply from the peak of 1,813 aircraft in 2018. 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.
The backlog (cumulative number of unfulfilled orders) for new aircraft has reached 17,000 planes, a record high. At present delivery rates, this would take 14 years to fulfil, double the six-year average backlog for the 2013-2019 period. However, the waiting time is expected to shorten as delivery rates increase.
The number of “parked” aircraft is 14% (approximately 5,000 aircraft) of the total fleet (35,166 as at December 2024, including Russian-built aircraft). While this has improved recently, parked aircraft remain 4 percentage points higher than pre-pandemic levels (equivalent to some 1,600 aircraft). Of these, 700 (2% of the global fleet) are parked for engine inspections. IATA expects this situation to persist into 2025.
“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 aging fleet that airlines are using has higher maintenance costs, burns more fuel, and takes more capital to keep it flying. And, on top of this, leasing rates have risen more than interest rates as competition among airlines intensified the scramble to find every way possible to expand capacity. This is a time when airlines need to be fixing their battered post-pandemic balance sheets, but progress is effectively capped by supply chain issues that manufacturers need to resolve,” said Willie Walsh, IATA’s Director General.
Specifically, IATA noted that, persistent supply chain issues at least partially responsible for two negative developments:
- Fuel efficiency (excluding the impact of load factors) was unchanged between 2023 and 2024 at 0.23 litres/100 available tonne kilometers (ATK). This is a step back from the long-term (1990-2019) trend of annual fuel efficiency improvements in the range of 1.5-2.0%.
- Exceptional demand for leased aircraft pushed leasing rates for narrow body aircraft to levels 20-30% higher than in 2019.
“The entire aviation sector is united in its commitment to achieving net zero carbon emissions by 2050. But when it comes to the practicality of actually getting there, airlines are left bearing the biggest burden. The supply chain issues are a case in point. Manufacturers are letting down their airline customers and that is having a direct impact of slowing down airlines’ efforts to limit their carbon emissions. If the aircraft and engine manufacturers could sort out their issues and keep their promises, we’d have a more fuel-efficient fleet in the air,” said Walsh.
Association decries slowness of SAF production
IATA also released new estimates for Sustainable Aviation Fuel (SAF) production showing that in 2024, SAF production volumes reached 1 million tonnes (1.3 billion litres), double the 0.5 million tonnes (600 million litres) produced in 2023. SAF accounted for 0.3% of global jet fuel production and 11% of global renewable fuel. This is significantly below previous estimates that projected SAF production in 2024 at 1.5 million tonnes (1.9 billion liters), as key SAF production facilities in the US have pushed back their production ramp up to the first half of 2025. In 2025, SAF production is expected to reach 2.1 million tonnes (2.7 billion litres) or 0.7% of total jet fuel production and 13% of global renewable fuel capacity.
“SAF volumes are increasing, but disappointingly slowly. Governments are sending mixed signals to oil companies which continue to receive subsidies for their exploration and production of fossil oil and gas. And investors in new generation fuel producers seem to be waiting for guarantees of easy money before going full throttle. With airlines, the core of the value chain, earning just a 3.6% net margin, profitability expectations for SAF investors need to be slow and steady, not fast and furious. But make no mistake that airlines are eager to buy SAF and there is money to be made by investors and companies who see the long-term future of decarbonisation. Governments can accelerate progress by winding down fossil fuel production subsidies and replacing them with strategic production incentives and clear policies supporting a future built on renewable energies, including SAF,” said Walsh, IATA’s director general.
“The airline industry’s decarbonisation must be seen as part of the global energy transition, not compartmentalised as a transport issue. That’s because solving the energy transition challenge for aviation will also benefit the wider economy, as renewable fuel refineries will produce a broad range of fuels used by other industries, and only a minor share will be SAF, used by airlines. We need the whole world to produce as much renewable energy as possible for everybody. Airlines simply want to access their fair share of that output,” said Marie Owens Thomsen, IATA’s Senior Vice President Sustainability and Chief Economist.
To reach net zero CO2 emissions by 2050, IATA analysis shows that between 3,000 to over 6,500 new renewable fuel plants will be needed. These will also produce renewable diesel and other fuels for other industries. The annual average capex needed to build the new facilities over the 30-year period is about $128 billion per year, in a best-case scenario. Importantly, this amount is significantly less than the estimated total sum of investments in the solar and wind energy markets at $280 billion per annum between 2004 and 2022.
“Governments must quickly deliver concrete policy incentives to rapidly accelerate renewable energy production. There is already a model to follow with the transition to wind and solar power. The good news is that the energy transition, which includes SAF, will need less than half the annual investments that realizing wind and solar production at scale required. And a good portion of the needed funding could be realized by redirecting a portion of the retrograde subsidies that governments give to the fossil fuel industry,” said Walsh.
Progress on expanding SAF production and use could be accelerated in three critical ways:
- Increase co-processing: Existing refineries can be used to co-process up to 5% of approved renewable feedstocks alongside the crude oil streams. This solution can be implemented quickly and requires minimal material investments. It should urgently be expanded by allowing a greater amount of renewable feedstock to be co-processed. By 2050, co-processing could save $347 billion in capex as more than 260 new renewable fuel plants would not need to be built.
- Diversify SAF production: There are 11 certified pathways to make SAF, but the HEFA method (hydrotreated esters fatty acids (used cooking oil, animal fats etc.)) accounts for around 80% of production in the next five years. SAF volumes could be boosted by increasing investments to scale up production through the other certified pathways, in particular Alcohol-to-Jet (AtJ) and Fischer-Tropsch (FT), which use biological and agricultural wastes and residue.
- Create a global SAF accounting framework: It is essential to have a registry that allows airlines to benefit from the environmental attributes of their SAF purchases and to be able to claim these against their obligations in a transparent manner that prevents double counting. Such a registry is necessary for achieving a global SAF market where all airlines can buy SAF, and all SAF producers can sell their fuel to airlines.
A recent IATA survey revealed significant public support for SAF. Some 86% of travelers agreed that governments should provide production incentives for airlines to be able to access SAF. In addition, 86% agreed that it should be a priority for oil companies to supply SAF to airlines.
For Editorial Inquiries Contact:
Editor Matt Driskill at matt.driskill@asianaviation.com
For Advertising Inquiries Contact:
Head of Sales Kay Rolland at kay.rolland@asianaviation.com
