IATA: Aviation industry profits to recover by 2025, but challenges remain
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The International Air Transport Association (IATA) has adjusted its 2025 airline financial outlook, with an improved profit outlook compared to 2024, showing resilience amid changes in the global economic and political environment.
Highlights of the 2025 airline profit forecast are as follows:
Net profit will reach $36 billion, up from $32.4 billion in 2024, but slightly lower than the previous forecast of $36.6 billion (December 2024).
Net profit margin will reach 3.7%, up from 3.4% in 2024 and 3.6% previously forecast.
Return on invested capital will be 6.7%, up from 6.6% in 2024, and largely unchanged from the previous forecast.
Operating profit will reach $66 billion, up from the $61.9 billion expected in 2024, but lower than the previous forecast of $67.5 billion.
Total revenue is expected to hit a record high of $979 billion (up 1.3% year-on-year from 2024, but lower than the previous forecast of $1 trillion).
Total spending is expected to reach $913 billion (up 1.0% year-on-year in 2024, but lower than the previous forecast of $940 billion).
Total passenger volume will reach 4.99 billion, a record high (up 4% year-on-year in 2024, but lower than the previous forecast of 5.22 billion).
Total air cargo volume will reach 69 million tons (up 0.6% year-on-year in 2024, but lower than the previous forecast of 72.5 million tons).
Willie Walsh, IATA Director General Walsh, chief financial officer of the International Monetary Fund, said: "In the first half of 2025, the global market faces many major uncertainties. Despite this, the aviation industry as a whole will still be better than in 2024, although slightly lower than our previous forecast, judging by multiple indicators including net profit. The most favorable driver is the price of jet fuel, which will fall by 13% year-on-year in 2024 and 1% lower than previously forecast. In addition, although affected by trade tensions and declining consumer confidence, we still expect airlines to carry more passengers and cargo in 2025 than in 2024. The industry's net profit margin will increase from 3.4% in 2024 to 3.7% in 2025, which is only about half of the average profitability of all industries. But this achievement under many challenges is enough to show that airlines are resilient in the face of adversity. "
Perspective
"To put such a large industry-wide figure in perspective, a macro perspective is required. While $36 billion in industry profits is impressive, that translates to just $7.20 per passenger per flight segment. Thin margins mean that any new taxes, airport or navigation fee increases, demand shocks or expensive regulation will quickly test the industry's resilience. Policymakers must fully appreciate that aviation is at the heart of a vast value chain that not only employs 86.5 million people but also supports 3.9% of global economic activity."
Profitability drivers
GDP (gross domestic product) is often viewed as the traditional driver of the aviation economy. However, despite global GDP growth expected to decline from 3.3% in 2024 to 2.5% in 2025, airline profitability is expected to improve due to lower oil prices. At the same time, continued strong employment and benign inflation forecasts are likely to drive continued demand growth, even if at a slower pace than previously forecast.
Efficiency is another important driver supporting the earnings outlook. The passenger load factor is expected to reach an all-time high in 2025, averaging 84.0% for the whole year. The aviation industry supply chain is blocked, and fleet expansion and modernization are still full of challenges.
Overall, the total revenue of the global air transport industry is expected to grow by 1.3%, higher than the 1% growth rate of total expenditure, and the industry is expected to be profitable.
Revenue
Industry revenue is expected to hit a record high of US$979 billion in 2025 (up 1.3% year-on-year from 2024).
Passenger revenue
Passenger revenue is expected to reach US$693 billion in 2025, up 1.6% year-on-year from 2024, a record high. Ancillary revenue is US$144 billion, up 6.7% year-on-year from 2024.
Passenger demand growth (calculated in revenue passenger kilometers/RPK) is expected to be 5.8%, and the growth rate has returned to normal after experiencing double-digit growth in the recovery from the epidemic.
Passenger yield is expected to fall by 4.0% year-on-year from 2024. This largely reflects the combined impact of falling oil prices and fierce industry competition. Passengers will continue to benefit from more affordable air travel. The actual average round-trip ticket price in 2025 is $374 in 2024 dollars, 40% lower than in 2014.
IATA's April 2025 passenger survey data predicts the following demand growth:
Around 40% of passengers surveyed expect to travel more in the next 12 months than in the previous 12 months. The majority (53%) said they expect to travel as much as in the previous 12 months. Only 6% said they expect to travel less.
Around 47% of passengers surveyed expect to spend more on travel in the next 12 months than in the previous 12 months. Almost the same proportion (45%) expect to spend the same amount on travel in the next 12 months, while only 8% expect to spend less.
Although 85% of travelers surveyed expect trade tensions to affect the economy of the region where they live and 73% expect to be personally affected, 68% of business travelers (50% of travelers surveyed) expect business travel to increase due to visiting clients amid trade tensions, and 65% of travelers surveyed say trade tensions will not affect their travel habits.
Cargo Revenues
Cargo revenues are expected to reach $142 billion in 2025, down 4.7% from 2024.
This expectation is mainly due to the impact of slower GDP growth, which is largely suppressed by trade protectionist measures including tariffs. Air cargo growth is expected to slow to 0.7% in 2025 (11.3% in 2024) and cargo volumes will fall by 5.2%, reflecting the combined impact of slower demand growth and lower oil prices.
While there is still significant uncertainty about the evolution of trade tensions this year, cargo demand has been good as of April, up 5.8% year-on-year.
Spending
Industry spending is expected to rise to $913 billion in 2025, up 1.0% from 2024.
The average price of fuel in 2025 is expected to be $86 per barrel, well below the average price of $99 in 2024. Total fuel costs are $236 billion, accounting for 25.8% of total operating costs. This is $25 billion lower than the $261 billion in 2024. The latest financial data shows that there has been little fuel hedging activity in the past year, and airlines generally benefit from lower fuel costs. Fuel is not expected to be affected by trade tensions.
SAF (sustainable aviation fuel) production is expected to grow to 2 million tons in 2025, but will only account for 0.7% of aviation fuel use. Although SAF production has doubled from 1 million tons in 2024 (all purchased by airlines), it will need to grow exponentially to meet the industry's commitment to achieve net zero carbon emissions by 2050.
IATA estimates that the average cost of SAF in 2024 will be 3.1 times that of aviation fuel, with an additional cost of $1.6 billion. In 2025, the global average cost of SAF is expected to be 4.2 times that of jet fuel. The main reason for the additional cost is the SAF "compliance fee" imposed by European fuel suppliers to meet the EU's mandatory requirement to add 2% SAF to aircraft fuel.
"The fuel suppliers' practice in fulfilling the SAF mandatory requirement is outrageous, resulting in the cost of achieving net zero carbon emissions by 2050 as high as $4.7 trillion. Fuel suppliers must stop profiteering on limited SAF supplies and increase production to meet the reasonable and legitimate needs of customers." Mr. Walsh stressed.
The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will cost airlines up to $1 billion in 2025. Although the CORSIA credit market may grow, Guyana is the only country that has issued high-quality carbon offset certificates that meet the standards required by the program.
Fleet/supply chain
The current global backlog of more than 17,000 aircraft, far higher than the pre-pandemic 10,000-11,000, means that delivery times could be as long as 14 years. Supply chain and production capacity constraints could be further exacerbated if countries withdraw from the multilateral agreement that exempts aircraft from tariffs.
Supply chain issues have severely affected airlines: leasing costs are high, the average fleet age has increased from 13 years in 2015 to 15 years, the fleet replacement rate is only half of the 5-6% in 2020, and fleet utilization is also declining, for example, being forced to use more models than needed on certain routes.
1,692 aircraft are expected to be delivered in 2025. Although this is the highest level since 2018, it is nearly 26% lower than expected a year ago. Given that supply chain issues are expected to persist in 2025 and may continue until the end of the 2020s, there is the possibility of further downward adjustments.
Intensified engine problems and spare parts shortages have led to record groundings for some models. There are now more than 1,100 aircraft under 10 years old, representing 3.8% of the fleet, compared to 1.3% between 2015 and 2018. Nearly 70% of the grounded aircraft are powered by PW1000G engines.
"Manufacturers continue to let down their airline customers. Every airline is frustrated that issues are taking too long to resolve. There are signs that these issues may take until the end of the decade to resolve, which is totally unacceptable!" said Mr. Walsh.
Risks
With geopolitical and economic uncertainty continuing to weigh, the biggest risks to the industry outlook include:
Conflict: A resolution to the Russia-Ukraine conflict would benefit airlines in reconnecting decoupled economies and reopening airspace. Conversely, any expansionary military action would dampen industry growth.
Trade tensions: Tariffs and a prolonged trade war would dampen demand for air cargo and potential travel. In addition, uncertainty over the Trump administration's trade policies would hinder major business decisions that drive economic activity, hampering demand for air cargo and business travel.
Fragmentation: Globally harmonized standards are critical to the aviation industry. Fragmentation of global standards or weakening of multilateral institutions and agreements will make the regulatory environment more complex or unstable, resulting in additional costs for airlines. Impacts include the evolution of climate, trade, customs facilitation policies, and many other matters that affect airlines' strategic decisions and operations.
Oil prices: Oil prices are the main driver of airline profitability. A complex range of factors affecting oil prices (including economic growth forecasts, the scale of extraction activities, decarbonization policies, sanctions, refining capacity and transportation bottlenecks) can cause sharp price fluctuations and have a significant impact on airlines' financial prospects.
Regional summary
In 2025, all regions are expected to achieve net profit growth. Compared with 2024, most regions will see improved financial performance, except for Latin America. However, profitability varies by airline and region. African airlines are expected to have the lowest total net profit margin, only 1.3%, while Middle Eastern airlines are expected to have the highest net profit margin, 8.7%.
African airlines face a tension between high operating costs and low air travel spending in several home markets. Shortages of aircraft and spare parts are inhibiting growth in the region. Shortages of foreign exchange, especially the U.S. dollar, in some economies are exacerbating challenges in the region. Despite this, demand for air travel in Africa persists.
Passenger Perspective
Air travel brings value to consumers. In April 2025, an IATA passenger survey of 6,500 respondents from 15 countries (who had traveled at least once in the past 12 months) showed that 97% of passengers were satisfied with their travel (58% were very satisfied). 89% believe that air travel makes their lives better, 81% appreciate the choice in travel planning, and 78% believe that air travel is value for money.
Passengers expect a safe, sustainable, efficient and profitable aviation industry. The IATA passenger survey shows that passengers believe that the aviation industry plays an important role:
90% of passengers surveyed believe that air travel is a necessity in modern life
90% of passengers surveyed believe that air connectivity is essential to the economy
89% of passengers surveyed believe that air travel has a positive impact on society
82% of passengers surveyed believe that the global air transport network is an important contribution to the United Nations Sustainable Development Goals
84% of passengers surveyed care about the success of the aviation industry
88% of passengers surveyed care about their future ability to fly
The aviation industry is committed to achieving a goal of net zero carbon emissions by 2050. Passengers are confident that this commitment can be achieved, and 81% of passengers surveyed believe that the industry is working together to achieve this ambitious goal. Some 77% of passengers surveyed believe that aviation industry leaders are taking the climate challenge seriously, far higher than government leaders (64% of passengers surveyed) and the oil sector (60% of passengers surveyed).