Trump’s Tariffs Can Threaten Asia’s Aviation Comeback

Just as Asia’s airlines seemed to have found their footing, having recovered from pandemic-related challenges, new headwinds are developing.

They range from US tariffs to inconsistent rules across regions to taxation in countries like India.

The wave of tariffs announced by US president Donald Trump has created uncertainty, leading already to delayed aircraft deliveries and increased costs of components used in spare parts imported by the US and manufactured and exported by countries like India.

“The outlook for the Indian aviation market is very bullish, but there are supply chain disruptions. issues being faced by airlines,” Subhas Menon, director general of the Association of Asia Pacific Airlines (AAPA), said in an interview with The Core.

This is also leading to increased costs for aircraft manufacturers Boeing and Airbus, which rely on international suppliers for critical components.

The 59-year-old Kuala Lumpur-headquartered AAPA has 18 major scheduled international airlines in the diverse geographical area that includes East Asia, South Asia, Southeast Asia, Central Asia, West Asia, and Oceania.

“There is a supply chain crisis but no demand crisis,” emphasised Menon who, as chair of Asia’s leading aviation body, has been advocating harmonised regulations across the Asia-Pacific region to ensure predictability for airlines and prevent unnecessary cost increases.

Menon warns that the fallout from the tariff barriers could disrupt growth trajectories just as airlines and suppliers had begun to regain altitude post-pandemic.

Tariffs Hurt Supply Chains

Asia Pacific region’s airlines account for over one-third of global passenger and air cargo traffic, but a supply crisis threatens to stall the region’s growth as the largest air transport market.

“The outlook for the Indian aviation market is very bullish, but there are supply chain disruptions. issues being faced by airlines,” Menon reiterated.

Where Does India Stand?

India, one of the fastest-growing aviation markets in the world, is particularly affected. Airlines are facing longer wait times for new aircraft and essential components.

Boeing, for instance, sources $1.2 billion annually from 320 Indian suppliers and is experiencing increased costs due to the 26% tariff on imports from India. This has raised concerns about long-term competitiveness and job creation in the aerospace sector.

Indian carriers, in particular Air India and Akasa, are said to be monitoring the situation as delays could impact expansion plans and fleet upgrades.

Indian carriers such as IndiGo, Air India and Akasa Air face a backlog of around 1,700 aircraft, with deliveries expected to be spread over the next decade because of delays due to global supply chain disruptions.

Deliveries for Air India orders for over 500 aircraft have been pushed back by six months to a year.

IndiGo has 40 Aircraft on Ground (AOG-grounded), while SpiceJet has around 30.

Rest Of The World

“In 2025, over one-fifth of aircraft deliveries are expected to be delayed,” said Menon.

Airlines in the Asia-Pacific region face a backlog of 6,034 aircraft, with over 20% of 2025 deliveries delayed, impacting growth and capacity. IATA estimates globally that aircraft delivery backlog exceeds 17,000, up from the 10,000-11,000 pre-pandemic, with an expected wait time of 14 years.

Meanwhile, China has instructed domestic airlines to cease all new Boeing jet deliveries.

Global airlines are also feeling the pressure, as higher costs for aircraft and parts are already leading to delayed fleet expansions and increased ticket prices.

Retaliatory tariffs from other nations are further complicating supply chains.

Amid growing concerns, the US Department of Commerce launched an investigation under Section 232 into the impact of commercial aircraft, jet engines, and parts on national security, which could lead to even higher tariffs.

Should further new tariffs be imposed, they could potentially disrupt global aviation supply chains further. The investigation is expected to conclude by January 26, 2026.

Tariffs are adding to the already existing supply chain problems that affect global aviation.

“Pandemic-induced supply chain disruptions remain unresolved, and there’s no clear path to any meaningful alleviation of these constraints,” said Menon.

Regulations and Constraints

The latest tariffs add to a bundle of problems airlines say they are already facing.

One is inconsistent regulations across the Asia Pacific region and not enough coordinated rules.

Menon says that regulations should only be enforced following discussions with airlines and that they should protect costs towards airlines.

For instance, he said regulators should not put pressure on airlines on full refunds or compensation. “We need help from governments and airports. Airlines are already looking after passengers more and more. We must get down to basics so we can help them.”

Menon said, “India is a competitive market. The airline business is not low-cost. That is a contradiction.”

Another regulatory issues on the list of concerns for AAPA in India is the tax system and India’s bilateral air traffic rights policy.

For instance, India's tax authorities have issued show-cause notices to ten international airlines, including Emirates, British Airways, Lufthansa, Singapore Airlines, and Qatar Airways, over unpaid Goods and Services Tax (GST) worth $1.2 billion.

The Directorate General of Goods and Services Tax Intelligence (DGGI) argues that services provided by the overseas headquarters of these airlines—such as aircraft maintenance, crew salaries, and rentals — are taxable under India's reverse charge mechanism

Willie Walsh, the outgoing Director General of the International Air Transport Association (IATA) said India should clarify tax rules, stating inconsistent interpretations create uncertainty and lead to years of litigation. Airlines are also frustrated by high airport charges and unpredictable tax enforcement, which could impact India's aviation growth.

India's restrictive bilateral air traffic rights policy limits international connectivity and airlines' expansion plans, “The more traffic rights you have the more traffic comes. Regulations are putting its own airlines at a disadvantage.”

AAPA has said in the past and was reiterated by Menon that India is facing a pilot shortage mainly due to a pilot recertification crisis. Delays in license renewals affect flight operations. The DGCA has tightened regulations, requiring more frequent skill assessments, but the process is slow and bureaucratic.

Looking Ahead

While supply chain issues and rising operational costs remain challenges for further capacity growth, Asia Pacific airlines carried 95.6 million international passengers in the first quarter of 2025, marking a 13% year-on-year increase.

“Demand for air services is strong, but growth has begun to moderate in 2025. Average load factors are at a record high of 83%, reflecting capacity constraints,” said Menon.

Aviation drives sustainable economies and global connectivity, playing a crucial role in economic and social development, especially in Asia Pacific, the largest market.

Despite strong demand for air services, airlines don’t control aircraft, engines, fuel, or airspace, making growth challenging due to external factors. Governments and suppliers must act to bridge this gap, Menon said.

While Asia-Pacific carriers continue to face rising costs and protectionist trade policies, a confident Menon highlighted the resilience of travel markets, driven by international tourist recovery and route expansions, stressing the importance of best practices for a safer and more sustainable future.

Walsh said, “Like all forms of connectivity, flying makes the world more prosperous…. That stands in contrast to isolationism, trade barriers and the fragmentation of the multilateral rules-based system.