Asia Pacific Airlines Warn Fuel Costs and Supply Chain Woes Will Persist Into 2026

Asia Pacific airline leaders meeting in Kuala Lumpur said on Friday that the high fuel costs and supply chain disruption that have defined 2026 are likely to carry into next year, even as passenger demand holds up. Executives and a government official spoke at the 70th Assembly of Presidents of the Association of Asia Pacific Airlines, a regional trade body whose members include carriers such as Singapore Airlines, Cathay Pacific and Thai Airways.

The association's director general, Wong Hong, said the operating environment for carriers in the region has changed markedly since the same gathering a year ago. He said airlines have kept demonstrating resilience, but the sharp jump in fuel prices, combined with other cost pressures and operational uncertainty, has made conditions far more demanding.

Fuel and supply chain pressures

Leaders on a panel at the event agreed that current conditions amount to a lasting shift. The chief executive of Cathay Pacific, Ronald Lam, said crisis disruptions in the external environment are likely to remain with the industry. The chief operations officer for technical operations at Air New Zealand, Mike Williams, pointed to fuel prices, geopolitical situations, inflation and supply chain uncertainty as permanent features of planning.

Wong said supply chain problems continue to hold back recovery and expansion. Aircraft deliveries remain constrained, engine availability and maintenance bottlenecks are limiting how much flying carriers can do, and prolonged delays make capacity planning harder. He put the aircraft order backlog at more than 16,000 units, adding that slower deliveries also delay the arrival of more fuel efficient jets.

Strong demand has not translated into healthy margins. Wong said Asia Pacific passenger demand rose 1.9 per cent in the first nine months of 2026, with an average load factor of 83 per cent, a figure he noted does not automatically produce a sound bottom line. The region remains the largest aviation market and is projected to stay the fastest growing, according to the association.

Calls for government support

At the close of the assembly, the association adopted four resolutions covering sustainable aviation fuel, passenger rights, cabin safety and aviation security. It called on governments to work constructively with carriers to protect the long term viability of air transport and to coordinate more closely with regulators on shared problems. On sustainability, it reaffirmed a target of five per cent sustainable aviation fuel use by 2030 and said the wider aviation ecosystem should share the burden of the transition.

Malaysia's deputy transport minister, Datuk Hasbi Habibollah, told the assembly that safety must remain the top priority. He called for deeper regional cooperation to expand maintenance, repair and overhaul capacity, streamline cross border certifications, harmonize air traffic management and speed up technical training pipelines for the next generation of aerospace professionals. He also said cybersecurity and the resilience of flight data must be treated as flight safety priorities.

For workers, the emphasis on training pipelines and maintenance capacity points to demand for engineers, technicians and safety and security staff, alongside the cabin crew and ground roles tied to airline operations. Regional airline leaders also said the air cargo market is benefiting from the artificial intelligence boom, adding another source of hiring.

What to watch

Separate research presented during the week offered a wider backdrop. A McKinsey report found that 56 per cent of airlines expect air travel growth to slow over the next two to three years because of higher jet fuel prices, rising maintenance expenses and delivery delays. The same analysis found that the global airline sector posted an economic loss of 12.8 billion dollars in 2025, about 40 per cent below its average annual loss of 20.9 billion dollars between 2012 and 2019.

In a sign of underlying strength in the wider hospitality sector, data presented at the Global Restaurant Leadership Conference in Cannes showed the Asia Pacific restaurant sector expanded 4 per cent in real terms through 2026, against 1 per cent growth in North America and Europe. Observers will now watch whether fuel prices ease and aircraft deliveries recover, and whether governments respond to the association's call for support.