Asia-Pacific is set to retain its crown as the world’s largest aviation market with projected annual growth of 5.1% in 2025. However, in its latest report, Aviation Outlook 2025 – Supply Chain Challenged, industry specialist Alton Aviation Consultancy highlights mounting challenges, including aircraft shortages, labour constraints, and economic uncertainty in China.

China, the region’s largest air travel market, has seen domestic travel surpass 2019 levels, yet international traffic remains 30% below pre-pandemic figures. While China has expanded visa-free entry for key inbound tourism markets, weak consumer demand and a prolonged property downturn have dampened the expected rebound, the report reveals.

In contrast, India’s aviation sector is surging, with traffic expected to grow 7% this year. The country’s airlines have nearly 1,900 aircraft on order, driven by a rising middle class and expanding low-cost carrier networks. The merger of Air India and Vistara is set to heighten competition, particularly with market leader IndiGo, as both airlines push into each other’s core routes, Alton Aviation says.

Aircraft shortages

Despite the strong demand, airlines in Asia are struggling with supply constraints. Global aircraft manufacturers face prolonged production delays, with narrowbody aircraft orders now backed up for nearly a decade.

Engine-related supply chain disruptions are also adding to the challenge. Over 600 aircraft have been grounded because of issues with Pratt & Whitney’s Geared Turbofan ( GTF ) engines. Labour shortages at suppliers and geopolitical tensions, including sanctions on Russian titanium exports, have further disrupted production timelines.

While the Boeing-Airbus duopoly remains dominant in Asia, China’s state-backed Comac is attempting to break into the market with its domestically produced C919 aircraft.

However, due to limited production capacity, reliance on Western components, and certification hurdles in key markets like the United States and Europe, it will take years before Comac can seriously challenge Boeing and Airbus on the global stage, according to the report.

Rising costs

Asia’s airlines are also contending with increasing labour and maintenance costs, even as passenger yields return to pre-pandemic levels.

To mitigate these challenges, airlines are extending the lifespan of older aircraft, increasing aircraft utilization, and using wet-leasing agreements to supplement capacity. Meanwhile, airports and maintenance providers are turning to automation and digital tools to help offset workforce shortages.

Adding to the risks, escalating trade tensions could impact global trade and air cargo demand, putting further pressure on industry profitability.

Globally, the report claims that the aviation industry is expected to surpass five billion passengers in 2025, with total revenues projected to exceed US$1 trillion for the first time.

While long-term industry growth is forecasted at 4% per year through to 2034, airlines will continue to grapple with supply chain disruptions, rising operational costs, and geopolitical instability, particularly in Europe and the Middle East.

Strategic expansion

Despite the ongoing supply chain constraints, Asian-based airlines are still pushing ahead with strategic expansion plans. A recent example is ANA Holdings which will invest US$20 billion in 77 new aircraft.

The move underscores the Japanese carrier’s confidence in air travel recovery, particularly on key international routes such as Asia-North America.

ANA has projected a 1.5x increase in international capacity by FY2030, banking on the region’s rising middle class and inbound tourism growth. Additionally, its low-cost carrier, Peach, is set to expand into medium-haul routes using fuel-efficient Airbus A321XLRs, reinforcing ANA’s competitive positioning in the region.

Even as airlines in Asia grapple with supply constraints, rising costs, and economic uncertainties, this bold fleet expansion signals growing optimism across the sector. Despite the near-term hurdles, Asia’s aviation sector remains a long-term growth story.

An expanding middle class, infrastructure investments, and increasing air connectivity will continue to drive demand. However, airlines and industry players must carefully navigate persistent supply chain disruptions, rising costs, and economic uncertainties to sustain momentum in 2025 and beyond.