Indian Airlines To Face Supply Chain Woes & Rising Costs In 2025

Post -pandemic, the performance of the Indian airlines might have improved, however, its progress is effectively capped by supply chain issues. Indian airlines, with a combined order book of nearly 2,000 aircraft, are facing significant global supply chain disruptions, including raw material shortages (like titanium), engine production delays, and labour shortages. Geopolitical tensions, such as the Russia-Ukraine war, have further disrupted the supply of critical materials. The market will continue to face the supply chain woes and rising costs, all of which will impact fleet expansion and operational efficiency.

The International Air Transport Association (IATA) predicted severe supply chain issues to continue to impact airline performance into 2025, raising costs and limiting growth. Globally, aircraft deliveries have fallen sharply from the peak of 1,813 aircraft in 2018. The estimate for 2024 deliveries was 1,254 aircraft, a 30 per cent shortfall on what was predicted going into the year. In 2025, deliveries are forecast to rise to 1,802, well below earlier expectations for 2,293 deliveries with further downward revisions in 2025 widely seen as quite possible.

Recent performance issues with Pratt & Whitney engines, which power nearly 70 per cent of India's narrow-body fleet, are worsening delays. "While some aircraft are grounded due to engine defects, the more critical challenge is delivery delays of new aircraft, slowing fleet expansion and route growth for airlines. In the short term, delivery delays are causing a capacity crunch, leading to higher airfares and constrained service reliability. In the long term, these disruptions may hurt airlines' ability to modernize fleets, achieve fuel efficiency, and remain cost-competitive, particularly for low-cost carriers (LCCs)," said Pragya Priyadarshini, vice president, Primus Partners.