Airports
Gloomy or realistic?
June 1st 2025
Following global air travel demand’s recovery post COVID, the aviation industry faces volatility from trade tensions, shifting traveller behavior and supply constraints, analysis by U.S. consultancy Bain & Company reports. Read More » It forecasts the industry faces the key challenges of uncertain travel demand in reaction to perceived travel barriers, economic uncertainty and aircraft and engine component shortages.
“The outlook for the next five years is mixed,” Bain global Airlines, Logistics and Transportation head, Geoffrey Weston, wrote. “In the near term, significant uncertainty surrounding trade flows, macroeconomic conditions and traveller sentiment will temper demand.
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“Over the long run, the fundamentals for air travel remain strong. More efficient aircraft, falling real ticket prices and rising demand in developing markets will keep air travel on a growth trajectory assuming the industry can overcome challenging capacity constraints.”
MRO has become a bottleneck for commercial aviation and the capacity constraints are likely to worsen. Bain predicts. Aircraft production and maintenance continue to lag demand. As new aircraft deliveries fall short of targets airline fleets are operating several years past their intended retirement. Adding to this squeeze, record aircraft are grounded awaiting overdue maintenance.
In 2024, Boeing and Airbus increased their fleets by 4.7%, well short of the estimated 6.8% growth needed to meet demand and enable normal retirement rates. In addition, average wing-to-wing turnaround time for Geared Turbo Fan engines has risen 78% from 140 days pre-Covid to more than 250 days in the last seven quarters.
The industry continues to be contained by critical raw materials in short supply, less plentiful Used Serviceable Materials given fewer aircraft retirements and acute skilled labor shortages.
“Tariff uncertainty is creating near-term volatility in airline demand and is exacerbating supply chain issues. This combination of challenges could alter demand, constrain capacity, and change the underlying nature of airline fleets. The shortfall of new aircraft deliveries means airlines and lessors must extend the life of mid and late-stage aircraft to meet demand. That drives a need for more investment in older fleets,” Bain & Company’s global Aerospace & Defence sector head, Jim Harris, said.
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However in the longer term, global economic growth, expanding middle classes in developing countries, more efficient aircraft and LCCs offering affordable travel are forecast to support industry growth. Global revenue passenger miles are estimated to grow at 4.7% to 2030 if economic growth stabilizes and supply keeps pace with that growth, Bain reports.
Aircraft lessors with mid-life fleets could benefit from increased demand as airlines delay new purchases and extend the life of their older planes. In contrast, U.S.-centric OEMs and carriers operating wide-body fleets face heightened risks, the consultancy predicts.
Trade barriers will disproportionately impact U.S. suppliers serving the global market. Economic uncertainty will lead to U.S. passengers reducing travel expenditure. Airlines will respond with lower frequencies on some routes and higher ticket prices to deal with the inevitable notch-up in operating costs and strained fleet flexibility.
Bain recommends a multi-pronged strategy to weather these challenges:
Assess Exposure: Airlines and suppliers must map their vulnerability to supply disruptions and tariffs at a granular level.
Plan for Multiple Scenarios: Fleet and production plans should be stress-tested against various economic and trade environments.
Invest in Resilience: Building stronger supply chains, digital monitoring tools and skilled labor pipelines are essential.
Engage in Policy: A proactive stance on trade and regulatory developments can yield strategic advantages.
