Aircraft Supply Constraints Temper Airline Capacity Expansion Despite Robust Passenger Demand

Global airline industry confronted persistent capacity constraints throughout 2025 despite robust passenger demand, as aircraft delivery delays and maintenance bottlenecks continued restricting network expansion across major markets. Industry observers projected full-year passenger traffic surpassing 9.9 billion travellers representing 4.8% year-on-year growth, yet cautioned expansion pace moderating significantly from recovery-driven surges characterising 2023-2024 period.

International Air Transport Association data revealed 2024 passenger traffic reached record 10.4% growth versus prior year, exceeding pre-pandemic 2019 levels by 3.8%. Industry achieved unprecedented 83.5% load factor—highest full-year efficiency ever recorded—partially attributable supply chain constraints limiting capacity additions. International traffic particularly drove recovery with 13% year-on-year increase, whilst domestic markets posted more modest 3% gains.

However, 2025 confronted sobering operational realities. Aircraft manufacturers' delivery backlogs reached 17,000 units during 2023, with production rates declining 50% since 2018. Global fleet average age increased from 13 years in 2018 to 14.6 years by 2023, forcing airlines maintaining older, less fuel-efficient aircraft longer than planned. Engine component shortages, particularly airfoil casting and forging bottlenecks, compounded maintenance challenges causing extended aircraft groundings.

Regional disparities emerged sharply. Middle Eastern carriers capitalised on European airlines' restricted Russian airspace access, maintaining direct Asian routing advantages whilst European competitors absorbed significant detour costs and extended flight times. China's sluggish market recovery alongside Southwest Pacific operators' supply challenges prevented several key markets achieving 2019 capacity baselines.

Industry profitability remained fragile despite strong demand, with average margins hovering merely $7 per passenger. Airlines implemented sophisticated revenue management strategies including artificial intelligence-driven dynamic pricing whilst restricting lower booking class availability in capacity-constrained markets. Jet fuel prices projected reaching $115 per barrel during 2025 further pressured cost structures, forcing carriers balancing ticket price increases against demand elasticity concerns.