Air New Zealand has the engines on its Airbus A320neo and A321neos and in April said it expected a big cut to compensation from engine manufacturers later this year.
“Manufacturers continue to let their airline customers down. Every airline is frustrated that these problems have persisted so long,” IATA director general Willie Walsh said.
“And indications that it could take until the end of the decade to fix them are off-the-chart unacceptable.”
Pratt & Whitney last year said it and Air New Zealand would spend about $250m on the Christchurch Engine Centre.
That project was expected to address some maintenance issues.
IATA said the worldwide aircraft backlog was now more than 17,000, up from barely 10,000 before Covid-19.
It said fleet expansion and modernisation were challenging amid supply chain failures.
Supply chain issues increased leasing costs and led to older fleets, the association said.
The average fleet age was now 15 years, up from 13 a decade ago.
IATA said 1692 aircraft were expected to be delivered this year.
That would be the biggest number in seven years but 26% below estimates a year ago.
IATA said if countries left a multilateral agreement exempting aircraft from tariffs, supply chain constraints and production limitations could be aggravated.
Sustainable fuel profiteering ‘outrage’
Sustainable Aviation Fuel (Saf) production was expected to grow but only comprise 0.7% of airline fuel use this year.
IATA said Saf needed “an exponential expansion” to meet net zero carbon emission targets by 2050.
It said average Saf costs were 3.1 times that of jet fuel, mostly due to compliance fees European suppliers levied to hedge potential costs because of mandates there to include 2% Saf in the jet fuel supply.
“The behaviour of fuel suppliers in fulfilling the Saf mandates is an outrage,” Walsh said.
“Fuel suppliers must stop profiteering on the limited Saf supplies available and ramp up production to meet the legitimate needs of their customers.”
But IATA also said the sector was showing improved profitability and resilience.
It expected a net profit margin of 3.7%, up from 3.4% last year.
Total global revenues were expected to hit a record high of US$979 billion ($1.62 trillion) and traveller numbers to reach a record high 4.99 billion.
Falling jet fuel prices were cited as the biggest driver of net profits.
“Moreover, we anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence.”
But the average profit was likely to be just US$7.20 per passenger per segment.
Walsh said that was a thin buffer and any new tax, increase in levies, demand shocks or costly regulation could create disarray.
IATA said as of April, cargo demand was holding up well with a 5.8% year-on-year increase.
Industry expenses were expected to increase by 1.0% but jet fuel was expected to stay about 13% below last year’s average prices.
IATA cited four key risks to the sector this year.
The first was armed conflict, such as the ongoing Russia-Ukraine war.
The second related to tariffs, prolonged trade wars and mercurial Trump Administration trade policies.
The third involved what IATA called “fragmentation of global standards or weakening of multilateral institutions and agreements.
“This includes the evolution of policies on climate, trade, facilitation and a myriad of other matters impacting airline strategic decision-making and operations.”
The fourth risk related to oil prices and potential volatility around economic growth projections, oil extraction, and decarbonisation policies.
All IATA regions were expected to deliver collective net profits in 2025.
The Asia-Pacific zone was expected to have the strongest growth in revenue passenger kilometres (RPKs), with demand up 9%.
RPKs measured the volume of passengers airlines carried.
Overcapacity issues in the region were showing signs of improvement due to better fleet deployment between domestic and international travel, IATA said.
North America would have the highest absolute profit, despite a projected US economic slowdown, IATA said.
But even there, a shortage of pilots and engine reliability problems would limit growth.
IATA said an April poll showed 40% of respondents expected to travel more over the next year than in the previous year and only 6% expected to travel less.
Most expected trade tensions to impact economies in which they lived but 65% of business travellers said trade tensions would have no impact on their travel habits.
The poll canvassed 6500 recent travellers across five continents in 15 markets, including Australia.