Aviation is one of the most essential industries worldwide, with far-reaching implications. It involves numerous moving parts — from caterers and manufacturers to airlines and extensive networks of cargo operators — that keep goods and people flowing across the globe.
With the volatility caused by fluctuating fuel prices, geopolitical tensions, and regulatory pressures, the ability to optimize working capital and stabilize supply chains is paramount. Understanding these dynamics is critical for businesses operating in the space.
This blog will explore how Supply Chain Finance (SCF) works in the aviation industry, its role in avoiding potential logistical disruptions, and how platforms like Raistone provide innovative solutions to companies grappling with the industry’s unique challenges.
How the aviation market is adapting to supply chain volatility
In 2023, the global aviation market was valued at approximately $762.8 billion and is expected to grow across sectors, driven by increasing demand for air travel, freight transport, and advancements in technology. The sector supports industries beyond commercial aviation, including aerospace, military defense, and high-tech manufacturing.
Aviation is capital-intensive and relies on a large, complex network of suppliers and buyers. In recent years, the industry has faced various challenges — from the COVID-19 pandemic, which sent demand for commercial airlines plummeting, to geopolitical upheavals causing raw material shortages and delivery delays.
The central challenge for many organizations is supply chain volatility. Aircraft manufacturing requires coordination among multinational suppliers, each providing specialized parts for highly engineered products. The reliance on suppliers, complex manufacturing cycles, and capital-heavy operations often leaves companies vulnerable to disruptions. Any disturbance — whether due to a regulatory issue, a manufacturing problem, or trade tensions — can cause significant delays and affect the entire market.
SCF provides a path to navigate these challenges, stabilizing and optimizing cash flows and easing the impact of disruptions by offering financing solutions that allow businesses to extend payment terms, improve liquidity, and lower financing costs.
The challenges of market dominance and supply chain vulnerabilities in aviation
The COVID-19 pandemic caused unprecedented disruptions in the aviation sector. Air cargo airlines and freight forwarders experienced a boost but were the only ones in the broader industry to benefit. Airlines grounded fleets, and demand for air travel collapsed. Aircraft manufacturers had to delay or suspend production, sending shockwaves through their supply chains.
While consumer demand has since recovered, many businesses are still dealing with labor shortages, parts delays, and the long-term effects of their diminished ability to forecast demand. The lingering effects of COVID-19 highlight how vulnerable the industry is to international upsets, underscoring the need for financial tools to stabilize cash flow in uncertain times.
Market Dominance
Two of the most prominent players in commercial aviation, Boeing and Airbus, dominate the market, providing aircraft for airlines worldwide. Their most popular models serve as the foundation for most major air travel — with list prices ranging from $89 million to $122 million for a Boeing 737 and $101 million to $111 million for an Airbus A320 — though many purchasers negotiate sale prices on individual units down by placing larger orders. This duopoly contributes to several challenges within the industry, including price fixation and supply chain vulnerabilities.
The competition is limited, with only two primary manufacturers controlling the bulk of the market. Any disruptions affecting one company — whether due to production delays, regulatory challenges, or financial strain — have the potential to drastically shift market dynamics, causing significant ripple effects throughout the industry.
For example, the 737 MAX crisis in 2019 demonstrated how a single manufacturer can disrupt the entire aviation ecosystem. More recently, Boeing announced the delay of its new 777X model, an already more than decade-long project with a history of setbacks, from 2025 to 2026.
The scarcity of alternatives and the long timelines associated with aircraft production exacerbate these risks, leaving airlines and suppliers with limited flexibility to manage supply chain interruptions in times of crisis.
Operating Costs & Consumer Demand
Despite the resurgence in demand for air travel, airlines are grappling with thin margins as costs continue to rise. Increased operational costs due to labor shortages, fuel price hikes, and maintenance expenses place significant financial strain on airlines and manufacturers.
While demand for air travel has bounced back from COVID-19 lows, the massive layoffs brought on by the pandemic resulted in significant labor shortages, which are still felt today.
Recently, Boeing announced a 10% reduction in its staff. While this could set the industry up for another significant departure of talent, as happened during the pandemic, it could also present competitors with an opportunity to hire and meet their labor needs — if they have the working capital on hand to expand staffing.
Account for the rising cost of jet fuel, never-ending maintenance costs, and the ongoing uncertainty in global trade, and it’s clear that maintaining healthy cash flow in this sector is incredibly difficult. Consequently, it’s advisable to have diverse financing solutions to stay afloat, such as securing government subsidies or leveraging alternative finance mechanisms like SCF.
Geopolitical Tensions
The geopolitical landscape also plays a crucial role in the volatility of the worldwide supply chain. Trade wars, sanctions, and political instability have disrupted the flow of essential raw materials such as titanium, which manufacturers previously heavily relied on Ukraine and Russia to manufacture and supply.
Additionally, the tensions between the U.S. and China have further complicated the flow of goods, causing disruptions not only in aviation but in a range of industries reliant on these materials. These political factors create uncertainty, raising the cost of production and limiting suppliers’ access to crucial materials. And with the pending implementation of significant tariffs, the future remains uncertain.
Government Regulation & Safety Standards
Government regulations are another source of complexity in the aviation supply chain. In the U.S., the Federal Aviation Administration (FAA) enforces strict standards for aircraft safety, maintenance, and operational compliance. The FAA also investigates accidents and catastrophic failures, generally resulting in production halts or grounding of aircraft models. Regulatory bodies such as the FAA can impose additional costs on manufacturers and airlines, impacting the efficiency of supply networks.
Recently, a number of high-profile aviation accidents and safety incidents have further underscored the FAA’s role in regulating and overseeing industry safety standards. These events, while rare, have led to temporary disruptions in aircraft production and significant shifts in consumer confidence, further highlighting the industry’s vulnerability.
Capital access and liquidity management in aviation
The aviation industry needs working capital access, as shown by recent events such as the blocked merger of JetBlue and Spirit Airlines, which left some in the industry highlighting the advantages larger carriers have over the smaller players.
This capital-tight environment can be partially attributed to factors including the high costs associated with manufacturing, long production times, and increased need to invest in operations to meet new regulatory demands and address labor shortages.
Aviation manufacturing requires enormous capital investment for aircraft development, regulatory approvals, and infrastructure investments. Additionally, aircraft are often produced with long lead times — meaning manufacturers need considerable financing to bridge the gap between production and delivery. This hefty capital requirement limits the ability of smaller firms or new entrants to compete, reinforcing the dominance of major players like Boeing and Airbus.
A comprehensive working capital strategy will be essential in ensuring that companies can navigate the financial complexities of the industry while maintaining a stable and resilient supply chain.
How Raistone helped this aircraft parts manufacturer unlock millions
A multi-billion airplane parts manufacturer sought a supplemental SCF program to expand their capabilities beyond a bank-led program that had strict supplier thresholds and excluded international partners. Raistone helped the manufacturer offer early payment to tail spend suppliers and onboard European suppliers that had previously been excluded. To date, Raistone has purchased over $200 million worth of invoices from their suppliers.
As a result, the company freed up critical working capital, improved liquidity, and strengthened supplier relationships. The program enabled the manufacturer to support suppliers previously restricted by their bank’s SCF program, unlocking the potential for hundreds of millions in additional spend.
With Raistone’s non-debt financial solutions, the aviation company not only enhanced its supplier relationships but also set the stage for continued growth, allowing them to leverage their increased production capacity effectively.
The future of Supply Chain Finance in aviation
Global demand for air travel continues to grow alongside expenses and other industry hurdles, making financial solutions like SCF critical.
Traditional financing mechanisms in aviation include loans from commercial banks, capital markets, and government grants. Compared to loans in other industries, aviation companies can face longer loan terms, larger down payments, or stricter credit requirements.
Lenders that are wary of the sector’s volatility can impose strict terms or deny financing altogether, particularly for smaller players. The collapse of over 60 smaller carriers during the COVID-19 crisis further amplified these challenges.
There will always be a need to create resiliency and cultivate critical supplier relationships in aviation supply chains. Raistone’s financial experts are ready to help you identify the ideal solution for your business needs.
Early payment solutions, like SCF, help to ensure supply chain stability, optimize cash flow for both buyers and suppliers and give companies a competitive advantage in a volatile industry.
About the Author
Ryan Gallagher, Assistant Vice President on the Raistone Sales Origination team, primarily focuses on supporting companies that are looking for a working capital solution, such as Supply Chain Finance (SCF). Ryan joined the Raistone team as the twentieth employee in December 2019 and is proud to work for a company that offers specialized solutions to these companies to help them fulfill new orders and improve their cash flow.
