Aircraft delivery delays are stunting growth, but there's a silver lining

Aircraft Delivery Delays Are Stunting Growth, but There Is a Silver Lining

Industry Faces Unprecedented Backlogs and Aging Fleets

Commercial airlines worldwide are confronting significant delivery delays, with a backlog exceeding 17,000 aircraft orders—equivalent to 14 years of production at current manufacturing rates, according to the International Air Transport Association (IATA). This growing backlog is impeding industry expansion and contributing to the aging of global fleets, industry officials highlighted during IATA’s Annual General Meeting in New Delhi.

The average age of airline fleets has increased from 13 years in 2015 to 15 years today. Boeing and Airbus, the two largest aircraft manufacturers globally, had initially forecasted 1,430 deliveries for this year. However, only 359 aircraft were delivered in the first four months, according to data from Cirium. Nick Careen, IATA’s senior vice president of operations, safety, and security, described the situation as highly unpredictable, stating, “You order an aircraft today, your guess is as good as mine when you’re going to receive it.”

IATA Director General Willie Walsh noted that the annual fleet replacement rate has fallen to approximately half of the 5% to 6% observed in 2020. He criticized manufacturers for their slow progress in resolving supply chain disruptions, warning that these challenges could persist through the end of the decade. Key factors contributing to the delays include a shortage of skilled labor, difficulties in sourcing titanium, and a scarcity of spare parts. The situation has been further exacerbated by the grounding of aircraft for inspections related to Pratt & Whitney GTF engines.

Industry Strain and Rising Tensions

The impact of these delays is being felt across the aviation sector. Peter Elbers, CEO of IndiGo, whose airline has nearly 1,000 Airbus narrowbody planes and 60 widebody aircraft on order, emphasized that delivery delays are hindering the ability to meet market demand. He described the situation as a “missed opportunity” for addressing growing passenger needs.

Tensions between airlines and manufacturers are escalating, with some carriers reportedly considering legal action over persistent delays, according to Reuters. Market reactions have been mixed: while Boeing experienced a positive month recently, airlines such as Air Canada are struggling with postponed deliveries of critical models like the A321XLR and 787-10.

A Silver Lining Amid Challenges

Despite these difficulties, some analysts identify a potential upside. Steve Saxon, a partner at consulting firm McKinsey, argued that delivery delays have inadvertently benefited airlines by curbing overexpansion, which in turn has supported higher yields and improved profitability. The airline industry posted a net profit of $32.4 billion last year, according to IATA. Walsh also acknowledged this positive aspect, noting that airlines achieved a record load factor of 84% in 2023, a level he had not anticipated reaching.

While commercial aviation contends with these delivery challenges, the business aviation sector is experiencing renewed growth. Demand for new business jets is projected to increase by 11% in 2025. Industry stakeholders are collaborating to address ongoing supply chain issues, striving to balance growth ambitions with operational stability in a complex and evolving environment.