BANGKOK: With persistent supply chain disruptions affecting aircraft deliveries, IATA chief Willie Walsh on Saturday said airlines must be “properly rewarded,” expressing concern over reports that original equipment manufacturers (OEMs) are considering raising prices due to tariffs and other pressures.
The International Air Transport Association (IATA), which represents nearly 350 airlines accounting for about 85% of global air traffic, has been vocal about the ongoing challenges faced by carriers. Addressing the 69th Assembly of Presidents of the Association of Asia Pacific Airlines (AAPA), Walsh said frustration is mounting as supply chain issues show little improvement.
Despite airlines operating on thin margins, Walsh noted that OEMs continue to post strong profits. He cited engine manufacturers as an example, pointing out that they have improved financial performance even amid widespread disruptions that have significantly increased costs for airlines.
Walsh said it is troubling to hear suppliers discuss price hikes linked to tariffs and supply chain challenges. “There’s got to be a correction. Airlines need to be properly rewarded. I don’t object to anyone making profits, but we need a better balance. These critical suppliers must significantly raise their game to serve the industry the way it needs to be served,” he said.
Global aviation has struggled with supply chain setbacks since the pandemic, leading to delayed aircraft deliveries at a time when airlines are expanding fleets to meet strong passenger demand.
AAPA Director General Subhas Menon warned that tariffs could hinder the fragile recovery of the supply chain and drive up non-fuel costs for airlines. While aircraft and engines are exempt, the raw materials and components sourced from around the world are not, he said. Tariffs also fuel inflation, affecting both supply and demand. “It’s a double whammy,” Menon said, though he noted that air transport demand remains buoyant.
On sustainability, Menon stressed that taxing airlines—directly or indirectly—has failed to produce results, and that production of Sustainable Aviation Fuel (SAF) remains insufficient.
A recent IATA–Oliver Wyman study estimates supply chain challenges will cost the global airline industry more than USD 11 billion in 2025. The commercial aircraft backlog exceeded 17,000 planes last year, up from the 2010–2019 average of 13,000. The slow production pace is expected to cost airlines over USD 11 billion this year, primarily due to excess fuel consumption, additional maintenance, increased engine leasing, and higher inventory costs, the study said.
