Originally published on Aerospace Tech Week
The International Air Transport Association (IATA) recently released its 2025 financial outlook for the global airline industry. It predicts passenger numbers to hit 5.2 billion, up 6.7 per cent compared to 2024.
Despite strong demand, the association predicts persisting supply chain challenges will restrict airline profitability and growth.
Willie Walsh, IATA’s Director General underscored the significance of these issues, saying:
“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.”
Key insights from IATA’s outlook include:
- Aging fleet: The average age of the global fleet is at a record high of 14.8 years. From 1990-2024 it averaged 13.6 years.
- Delivery shortfalls: The estimate for 2024 deliveries fell 30 per cent short of predictions at 1,254 aircraft
- Grounded aircraft: 14 per cent of aircraft are “parked”
- Order backlog: The backlog for new aircraft is at a record high of 17,000 planes
- Fuel efficiency stagnation: This remained unchanged between 2023 and 2024
Walsh also criticised manufacturers for the limitations this imposes on sustainability goals:
“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.”
Although traveller numbers will surpass five billion for the first time, the challenges faced this year will extend into 2025 and put continued pressure on the industry.
For more like this see:
- 2024 vs 2025: Amadeus shares travel trends report
- Summary: The UK Civil Aviation Authority’s new AI strategy
- Passenger demands, personalisation, and the “say-do” gap
