IATA Chief Calls for Fair Rewards as Supply Strains Hit Airlines

The global aviation industry is under strain as supply-chain woes continue to disrupt aircraft deliveries and push up operating costs. IATA Director General Willie Walsh says airlines must be properly rewarded, arguing that carriers are absorbing the heaviest impact while suppliers raise prices and protect their margins.

In his address to AACP Assembly of Presidents, Walsh noted that there was an increasing imbalance in the aviation ecosystem. He pointed out that OEMs, particularly engine manufacturers, are making good profits as airlines are facing delays, old fleet and increased maintenance expenses.

“There’s got to be a correction to this. Airlines need to be properly rewarded… we need to see a greater balance,” he said. Tariffs increase the strain by striking the materials and components of aircraft manufacturing. Aircraft and engines may be finished, however, a lot of underlying components are not.

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This increases the cost of suppliers and puts pressure on airlines and passengers in terms of inflation. The forecasts in the industry show the extent of the depth of the issue. In a collaboration between IATA and Oliver Wyman, the disruption of supply-chain may cost airlines more than US11billion in 2025. This is a heavy load that accrues through additional fuel combustion by older planes, increase in maintenance intervals, greater leasing charges of the engines and more stock levels.

The crunch is being exacerbated by a backlog of over 17,000 aircraft to be delivered. With the increasing demand of air travel, airlines are unable to increase their capacity as expected. It makes them use older jets and incur the additional cost of operations. Walsh is asking suppliers to become more supportive and competitive and to reinstate fairness in the aviation value chain. In his view, this change is necessary to achieve the stability of the industry in the long run.