NEW DELHI – May 31, 2025 – Following global air travel demand’s recovery post COVID, the industry now faces new volatility from trade tensions, shifting traveler behavior, and supply constraints. This is particularly true in the US, where February and March US passenger air travel dropped below 2024 levels.

Recent analysis by Bain & Company suggests that the aviation industry is facing two key challenges - uncertain travel demand as a result of reaction to perceived travel barriers and economic uncertainty, and aircraft and engine parts shortages. Both of these have been exacerbated by ongoing trade tensions.

Over the long term, global economic growth, expanding middle classes in developing countries, more efficient aircraft, and low-cost carrier models allowing for affordable travel, are expected to support industry growth. Global revenue passenger miles are forecast to grow at 4.7% CAGR through 2030 if economic growth stabilizes and supply keeps pace, Bain reports.

“The outlook for the next five years is mixed. In the near term, significant uncertainty surrounding trade flows, macroeconomic conditions and traveler sentiment will temper demand. 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,” said Geoffrey Weston, head of Bain & Company’s global Airlines, Logistics and Transportation sector.

Aircraft engine maintenance, repair and overhaul (MRO) has become a bottleneck for commercial aviation and the capacity constraints are likely to worsen. 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, a record number of aircrafts are grounded, waiting on overdue maintenance.

In 2024, Boeing and Airbus grew their fleets by only 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 for geared turbofan engines have risen 78% from 140 days pre-Covid to more than 250 days over the past seven quarters.

The industry continues to be harried by issues such as critical raw materials in short supply, less plentiful used serviceable materials (given fewer aircraft retirements), and acute skilled labor shortages. This is exacerbated by regulatory and trade uncertainty.

“Tariff uncertainty is creating near-term volatility in airline demand and further 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,” said Jim Harris, head of Bain & Company’s global Aerospace & Defense sector.

Aircraft lessors with mid-life fleets could also see increased demand as airlines delay new purchases and extend the life of older planes. In contrast, US-centric OEMs and carriers operating widebody fleets face heightened risks.  Trade barriers will disproportionately impact US suppliers serving the global market.  Economic uncertainty will lead to US passengers reducing travel expenditures. 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.

In a constrained industry, resilience is more than risk management—it provides a significant competitive edge.

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Media contacts:

Ann Lee (Singapore) — ann.lee@bain.com

Gary Duncan (London) — gary.duncan@bain.com

Dan Pinkney (Boston) — dan.pinkney@bain.com

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