Airlines are expected to see a modest increase in profitability in 2025, despite geopolitical tensions, trade uncertainty, and supply chain disruptions, according to the International Air Transport Association (IATA). The industry’s net profits are forecast at $36 billion, up from $32.4 billion in 2024, though slightly below earlier projections.
"Considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify,” said Willie Walsh, IATA’s Director General.
Passenger growth drives airline gains
Passenger numbers are expected to hit a record 4.99 billion in 2025, reflecting a 4 per cent year-on-year rise. Passenger revenues will increase to $693 billion, supported by a 6.7 per cent growth in ancillary revenue. Real average return airfare is projected to drop to $374, around 40 per cent lower than in 2014, due to lower fuel prices and intense competition. Meanwhile, passenger load factors are set to reach a record 84 per cent.
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Airline expenses see slight growth
Total airline expenses are forecast to grow by 1 per cent to $913 billion, below previous estimates, helping to preserve profit margins. Airlines face challenges in fleet renewal, with supply chain issues causing long delivery delays and pushing up leasing costs. Only 1,692 aircraft are expected to be delivered in 2025, nearly 26 per cent fewer than earlier estimates.
Key risks include geopolitical conflict, evolving trade policies (especially in the US), oil price volatility, and regulatory fragmentation. Walsh urged governments to avoid increasing the industry's cost burden, noting the thin average profit of $7.20 per passenger.
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Drop in fuel prices drive airline profit
A 13 per cent drop in jet fuel prices is a major boost for airlines, with the average cost per barrel expected at $86. The industry’s total fuel bill will fall by $25 billion to $236 billion, accounting for 25.8 per cent of operating costs. However, sustainable aviation fuel (SAF) costs remain a concern, with prices over four times higher than regular jet fuel, driven in part by European compliance fees.
Cargo revenue declines amid global trade tensions
Cargo revenues are projected to decline by 4.7 per cent to $142 billion, reflecting slowing global GDP growth and trade tensions. Air cargo growth will shrink to just 0.7 per cent after an 11.3 per cent rise in 2024, with yields falling 5.2 per cent.
North American airlines to lead profits
In 2025, the global aviation industry is set to see collective net profits, with most regions showing improvement over 2024. However, profitability varies widely across regions.
North America will remain the most profitable, with carriers expected to generate $12.7 billion in net profits, despite challenges like a slowing economy and pilot shortages.
Europe is forecast to see profits rise to $11.3 billion, boosted by strong demand from low-cost carriers, the return of grounded aircraft, and the EU's open skies agreements with North Africa.
Asia-Pacific, the largest market by revenue passenger kilometers (RPK), will see slight improvements in profits, reaching $4.9 billion. While passenger demand remains strong, the region faces economic challenges, especially in China.
Latin America is the only region where profitability is expected to decline in 2025. Weak currencies and high operational costs, compounded by proposed taxes like Brazil's VAT on tickets, are impacting the region.
Africa faces the weakest financial performance, with a net profit margin of just 1.3 per cent, due to high operational costs and limited aircraft availability, despite sustained demand for air travel.
Carriers in West Asia will lead in profitability with a strong 8.7 per cent margin, supported by a robust demand for premium and long-haul flights.
