Airlines need to be properly rewarded, says IATA chief amid supply chain woes
Bangkok (PTI): With supply chain woes continuing to impact aircraft deliveries, IATA chief Willie Walsh on Saturday said airlines need to be properly rewarded as he flagged concerns about talks of original equipment manufacturers planning to increase prices due to tariffs and other issues.
The International Airport Transport Association (IATA) represents nearly 350 airlines that account for around 85 per cent of the global air traffic.
Speaking at the 69th Assembly of Presidents of the Association of Asia Pacific Airlines (AAPA) here, IATA Director General Willie Walsh said there was huge frustration that the supply chain issues are not getting much better.
While airlines are a low margin industry, he said the margins of OEMs (Original Equipment Manufacturers) are high.
Taking examples, Walsh said engine makers are actually improving their financial performance during a period of massive disruption which has added massive costs to the airline industry.
Walsh pointed out that it is bothering when he hears suppliers talking about that they want to increase prices because of tariffs and other supply chain issues.
"There's got to be a correction to this. Airlines need to be properly rewarded. I don't object to anybody making profits....
"But we've got to see a greater balance and we need to see these critical suppliers raising their game and raising their game significantly to ensure that they're serving the industry in the way that we need to be served," he said.
The global aviation industry has been grappling with supply chain issues, especially after the pandemic, resulting in delayed aircraft deliveries even as airlines are looking to expand their fleets to meet rising passenger traffic demand.
At the Assembly, AAPA Director General Subhas Menon said tariffs will impact the nascent recovery of the supply chain and also increase non-fuel cost for the airlines.
"Supply chain recovery is now undermined by tariffs which increase supplier costs. While aircraft and engines are exempt, their raw materials, and components which come from many parts of the world, are not.
"Tariffs also affect demand through inflation. It is a double whammy as both supply, and demand sides of the market are affected," Menon said even as he added that air transport demand is buoyant.
Mentioning about sustainability, Menon emphasised that taxing airlines directly or indirectly through mandates has not worked and that Sustainable Aviation Fuel (SAF) production remains low.
A study, done by IATA in collaboration with consulting firm Oliver Wyman, said supply chain challenges are estimated to cost more than USD 11 billion for the global airlines industry in 2025.
The worldwide commercial aircraft backlog was more than 17,000 aircraft last year, higher than 2010-2019 period when the backlog stood at 13,000 planes per year.
The slow pace of production is projected to cost the airlines industry over USD 11 billion this year, mainly due to excess fuel, additional maintenance, increased engine leasing and surplus inventory holding costs, as per the study released in October.
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K'taka remains central to Aequs' strategy, says min Patil amid row over firm's investment in TN
Bengaluru (PTI): Karnataka Commerce and Industries Minister M B Patil on Monday asserted that Aequs continues to expand in the state and that its proposed investment in neighbouring Tamil Nadu was a business decision aimed at diversification, not a shift away from Karnataka.
Reacting to criticism on social media over reports that the Karnataka-based firm had signed a major investment deal in Tamil Nadu's Krishnagiri district for setting up a specialised aerospace and defense manufacturing cluster, he said the state government was fully aware of the company's plans and remained confident about its long-term commitment to Karnataka.
"While we welcome every major investment in India, would like to clarify a few points," Patil said in a post on 'X'.
Aequs was significantly expanding its footprint within Karnataka, including a Rs 3,000 crore investment in Kolar for electronics manufacturing.
"Its recently approved Rs 1,500 crore ECMS project will also be grounded in the state. Karnataka remains central to its long-term strategy," he said.
Patil added that the government had prior knowledge of the TN proposal.
The government was already informed and aware that the TN investment is a business decision aimed at geographic diversification and de-risking operations, not a shift away from Karnataka.
"Healthy competition between states strengthens India's manufacturing ecosystem," he said.
Emphasising the state's focus on high-technology sectors, Patil said, "We remain committed to deepening Karnataka's leadership in aerospace and advanced manufacturing, and our engagement with industry partners is strong and ongoing."
The Aequs Group has pledged Rs 4,000 crore to bolster Tamil Nadu's aerospace manufacturing capabilities at the SIPCOT-Shoolagiri Industrial Park in Krishnagiri district.
The group proposes to establish a specialised aerospace and defense manufacturing cluster for the production of aircraft engines, gearbox components, and precision engineering parts. This initiative is expected to provide employment to 7,000 individuals.
