IATA: 8,000 aircraft backlog holding back aviation

The outgoing Director-General of the International Air Transport Association (IATA), Willie Walsh, argued that aviation’s biggest threat is no longer weak demand, but the capacity to support it

Among the crises threatening the industry’s future, one that stood out as most entrenched was the industry’s ever-growing aircraft backlog.

Walsh

After two decades in which airlines repeatedly confronted shocks that destroyed traffic growth, from the global financial crisis to Covid-19, passengers continue to fly, cargo continues to move, and connectivity remains resilient. Even as fares rise and fuel costs surge, travellers are still spending.

Instead, the industry is confronting a different challenge. Virtually every part of the aviation value chain responsible for supporting growth is failing to expand at the pace required.

Aircraft manufacturers cannot deliver enough aircraft. Engine makers cannot keep fleets flying. Air traffic management systems cannot unlock efficiency gains. Governments are imposing regulatory burdens while failing to build infrastructure. Sustainable aviation fuel production remains far below what policymakers themselves have demanded.

Taken together, these constraints are creating what may become the defining aviation challenge of the decade. The sector is no longer demand-constrained. It is capacity-constrained.

Willie Walsh’s final State of the Industry address as IATA Director General paints a difficult picture for airline profitability.

IATA expects industry net profit to fall from $45 billion in 2025 to $23 billion in 2026, while net margins decline from 4.2% to 2.0%.

Average jet fuel prices are forecast to rise 70% year-on-year, adding approximately $100 billion to the industry’s collective fuel bill.

Ordinarily, such a cost shock would be expected to significantly suppress demand.

Instead, IATA’s consumer research suggests travellers remain willing to absorb higher prices.

According to Walsh, 49% of passengers expect to spend more on travel this year than last year, while another 43% expect spending to remain unchanged.

That resilience is reflected in traffic forecasts. Passenger demand is still expected to grow in 2026, albeit at a slower rate of 2.1%. The challenge facing airlines is therefore not the absence of customers. It is the growing inability of the aviation ecosystem to accommodate them efficiently.

Walsh devoted a significant portion of his speech to what has become one of the industry’s most persistent frustrations.

He noted that the global aircraft backlog now exceeds 18,000 aircraft, adding that the average fleet age has reached a record 15.2 years, while airlines are short more than 5,000 next-generation aircraft expected to replace older fleets.

The consequences, he reiterated, extend far beyond delivery schedules, hinting that those aircraft were central to the airline’s plans to reduce fuel consumption, lower maintenance costs, and support growth.

Their absence is forcing carriers to operate older aircraft for longer while simultaneously paying higher fuel prices.

According to Walsh, supply chain failures cost airlines at least $11 billion in 2025. The timing could hardly be worse.

 Many of the world’s major aviation markets, he said, continue to rely on air traffic management systems that have changed little despite advances in aircraft technology.

Europe remains fragmented. The United States continues to operate systems that Walsh described as “nostalgic”. Political resistance continues to delay reforms that airlines have advocated for decades.

The economic implications are considerable. IATA estimates that even a modest 5% improvement in ATM efficiency could save airlines $12.5 billion annually while simultaneously reducing carbon emissions.

Unlike in SAF production or aircraft manufacturing, the required technology already exists. Modern aircraft are capable of more precise routing and more efficient operations. The limiting factor is increasingly the infrastructure surrounding them.

This represents another manifestation of the same problem. Capacity constraints are no longer confined to aircraft production. They are embedded throughout the aviation system.

Wole Shadare