Supply chain disruptions create ripple effects across global aviation industry

Air passenger demand hit an all-time high for the industry, and in all regions except Africa in July, with clear signs that many markets are returning to long-term growth trends after the post-pandemic bounce back. Total demand, measured in revenue passenger kilometres (RPK), was up 8.0% compared to July 2023, data provided by the International Air Transport Association (IATA) reveal.
Total capacity, measured in available seat kilometres (ASK), was up 7.4% year-on-year. The July load factor was 86.0% (+0.5ppt compared to July 2023). There was no significant negative demand impact from the CrowdStrike IT outage in the third week of July.
International demand rose 10.1% compared to July 2023. Capacity was up 10.5% year-on-year and the load factor fell to 85.9% (-0.3ppt compared to July 2023).
Domestic demand rose 4.8% compared to July 2023. Capacity was up 2.8% year-on-year and the load factor was 86.1% (+1.7ppt compared to July 2023).
“But persistent supply chain bottlenecks have made deploying the capacity to meet the need to travel more challenging,” noted IATA Director General Willie Walsh.
Industry analysts say the global airline industry has faced several challenges in deploying adequate capacity due to supply chain bottlenecks.
Aircraft manufacturers including heavyweights Boeing and Airbus have experienced significant delays in production due to shortages of key components, such as engines and avionics. These delays mean that their customers (airlines) cannot receive new aircraft on schedule, limiting their ability to expand or update their fleets.
Supply chain disruptions have also affected the availability of spare parts, leading to delays in aircraft maintenance and repairs. This results in longer ground times for aircraft, reducing the number of operational planes and the overall capacity airlines can offer.
The aviation industry has also been hit by labour shortages, particularly in skilled positions such as pilots, mechanics, and ground staff. These shortages, compounded by supply chain issues, further strain the industry’s ability to deploy adequate capacity.
Airports and other critical infrastructure projects have also been hit due to shortages of materials and equipment. This has prevented many airlines from expanding their operations or adding new routes, limiting capacity.
Supply chain disruptions have also driven up the costs of aircraft parts, fuel, and other operational necessities. Higher costs make it difficult for airlines to afford expanding their capacity, particularly as they recover from the financial impact of the Covid-19 pandemic.
In some cases, supply chain issues have led to delays in regulatory approvals for new aircraft or modifications to existing ones.
This, market analysts say, prevent airlines from deploying new planes or configurations that would help increase capacity.
“The winding down of the peak northern summer season is a reminder of how much people depend on flying. As the mix of travellers shift from leisure to business, aviation’s many roles are evident—reuniting families, enabling exploration, and powering commerce. People need and want to fly. And they are doing that in great numbers. “Load factors are at the practicable maximum. But persistent supply chain bottlenecks have made deploying the capacity to meet the need to travel more challenging. As much of the world returns from vacation, there is an urgent call for manufacturers and suppliers to resolve their supply chain issues so that air travel remains accessible and affordable to all those who rely on it,” Walsh remarked. The global nature of the aviation industry means that even small disruptions in the supply chain will have a ripple effect, causing delays in aircraft deliveries, maintenance, and other critical operations. This interconnectedness, obviously, exacerbate capacity challenges.
These challenges create a complex environment, where airlines must navigate not only their own operational limitations but also external factors beyond their control.
n Pratap John is Business Editor at Gulf Times. X handle: @PratapJohn