Global airlines are forecast to end the year with $36 billion in net profit, 1.6 per cent below earlier predictions of $36.6 billion, as trade tension and economic uncertainties weigh on travel demand.
That is still an improvement on the $32.4 billion earned in 2024, driven mainly by a 13 per cent year-on-year drop in jet fuel prices, the International Air Transport Association (Iata) said in its latest industry report on Monday.
“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,” Willie Walsh, director general of Iata, said at the organisation's annual meeting held this year in New Delhi.
“These destroy wealth and lower living standards. For the times we live in, this is an important message.”
Total revenue will hit a record high of $979 billion this year, up 1.3 per cent on 2024, but will miss the $1 trillion forecast in December 2024. The year-on-year increase outpaces the 1 per cent increase in total expenses of $913 billion, shoring up industry profitability.
Passenger volumes will also reach a record high of 4.99 billion in 2025, an increase of four per cent on last year, but falls short of the 5.22 billion travellers forecast earlier.
“The first half of 2025 has brought significant uncertainties to global markets. Nonetheless, by many measures including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections,” Mr Walsh said.
“We anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence.”
Airlines' net margins will rise to 3.7 per cent in 2025, from 3.4 per cent in 2024.
“Considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify,” he said.
While a net profit of $36 billion is “significant”, it translates into $7.20 per passenger per segment, and is still a “thin buffer”, the Iata chief said.
“Any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry’s resilience to the test,” he said, urging policymakers to keep this “clearly in focus” as the industry employs 86.5 million people and supports 3.9 per cent of global economic activity.
Airlines are facing a multitude of challenges from continuing supply chain bottlenecks, continued delays in aircraft deliveries, navigating around conflict areas and high costs of sustainable aviation fuels.
On top of that, US President Donald Trump's tariffs scheme has created economic uncertainty, unleashed a global trade war and tightened enforcement of border control rules.
Falling airfares
Iata predicts that passenger yields, a proxy for air fares, will fall by 4 per cent this year compared with 2024. This reflects the impact of lower oil prices and strong industry competition, it said.
This means cheaper ticket prices for travellers. The real average return trip fare is expected to be $374 in 2025, which is 40 per cent below 2014 levels, Iata said.
Passenger revenue will hit an all-time high of $693 billion this year, up 1.6 per cent from last year.
This comes as load factors – a measure of how well airlines fill available seats – will reach a record full-year average of 84 per cent in 2025, as fleet expansion and upgrades remain challenging amid “supply chain failures”, Iata said.
The aviation industry's total expenses will reach $913 billion in 2025, a per cent below 2024, but below the previously projected $940 billion.
Jet fuel is expected to average $86 a barrel this year, well below the $99 average in 2024, translating into a total fuel bill of $236 billion and accounting for 25.8 per cent of all operating costs, in line with Iata estimates.
Air cargo revenue are forecast to drop 4.7 per cent year-on-year to $142 billion in 2025, mainly due to reduced economic growth and “trade-dampening protectionist measures” such as tariffs, the airline body said.
Cargo yield is also expected to reduce by 5.2 per cent, reflecting a combination of slower demand growth and lower oil prices.
Iata said main risks to the outlook include a widening of conflicts such as the Russia-Ukraine war, while tariffs and prolonged trade wars would dampen demand for air cargo and potentially travel.
Middle East outlook
Airlines in the Middle East in 2025 are expected to earn $27.20 in profit per passenger, the highest of any region, as “robust” economic performance supports strong air travel demand, Iata said.
That is more than triple the global average of $7.20 per passenger this year and exceeds an earlier forecast of $23.9 profit per passenger forecast for 2025. It is below $28.5 recorded for 2024.
Middle East airlines will end 2025 with an estimated $6.2 billion in net profit, a slight rise from $6.1 billion in net profit in 2024, and higher than a December forecast of $5.9 billion, according to the latest forecast by Iata.
Carriers in the Middle East are forecast to have the strongest net profit margin of 8.7 per cent compared to all other regions of the world.
Regional airlines, particularly in the Gulf, had a strong year of profitability amid continued strong demand for air travel, a push to increase international tourist arrivals, investment in airport upgrades and government policies designed to boost the aviation sector's contribution to the gross domestic product.
“However, with delays in aircraft delivery, the region will see limitations in capacity as airlines embark on retrofit projects to modernise their fleet, hence limiting growth,” the airline body said.
Iata said its 82nd annual meeting will be held in Rio de Janeiro, Brazil in June 2026 and will be hosted by LATAM Airlines Group.
