The International Air Transport Association (IATA) has released its financial outlook for the global airline industry through 2025, which shows a slight strengthening in profitability amid ongoing cost and supply chain challenges. Highlights include:
- Net profits are expected to be $36,6 billion in 2025 for a net profit margin of 3,6%. This is a slight improvement from the expected net profit of $31,5 billion in 2024 (net profit margin of 3,3%). Average net profit per enger is expected to be $7,0 (down from a high of $7,9 in 2023, but an improvement from $6,4 in 2024).
- Operating income in 2025 is expected to be $67,5 billion, for a net operating margin of 6,7% (better than the 6,4% expected in 2024).
- Return on invested capital (ROIC) for the global industry is expected to be 6,8% in 2025. While this is an improvement on the 2024 ROIC of 6,6%, returns for the industry at the global level remain below the weighted average cost of capital. ROIC is strongest for airlines in Europe, the Middle East and Latin America, where it has exceeded the cost of capital.
- Total industry revenues are expected to be $1,007 trillion. This is an increase of 4,4% from 2024 and will be the first time that industry revenues will sur the $1 trillion mark. Expenses are expected to grow 4,0% to $940 billion.
- enger numbers are expected to reach 5,2 billion in 2025, an increase of 6,7% compared to 2024 and the first time enger numbers have sured the five billion mark.
- Cargo volumes are expected to reach 72,5 million tonnes, an increase of 5,8% compared to 2024.
“We expect airlines to report global profits of $36,6 billion in 2025. This will be hard-earned as airlines take advantage of lower oil prices, maintain load factors above 83%, tightly control costs, invest in decarbonization, and manage the return to more normal growth levels following the extraordinary recovery from the pandemic. All of these efforts will help mitigate several obstacles to profitability that are beyond airlines’ control, including persistent supply chain challenges, infrastructure deficiencies, burdensome regulation, and a rising tax burden,” said Willie Walsh, IATA’s Director General.
“By 2025, industry revenues will exceed $1 trillion for the first time. It’s also important to put this in perspective. A trillion dollars is a lot — nearly 1 percent of the global economy. That makes airlines a strategically important industry. But that airlines carry $940 billion in costs, not to mention interest and taxes. They retain a net profit margin of just 3,6 percent. In other words, the profit-loss margin, even in the good year we expect in 2025, is just $7 per enger. With margins this thin, airlines must continue to watch all costs and insist on similar efficiencies across the supply chain — especially from our monopolistic infrastructure providers who often disappoint us in performance and efficiency,” Walsh said.
IATA highlighted the far-reaching benefits of increased connectivity. The latest estimates show that airline employment is expected to grow to 3,3 million by 2025. Airlines are the core of a global aviation value chain that employs 86,5 million people and generates $4,1 trillion in economic impact, ing for 3,9% of global GDP (2023 figures). Connectivity is an economic catalyst for growth in nearly every sector.
“Looking ahead to 2025, for the first time, the number of travelers will exceed five billion and the number of flights will reach 40 million. This growth means that aviation connectivity will create and jobs across the global economy. The most obvious are the hospitality and retail sectors, which will be geared up to meet the needs of a growing number of customers. But almost every business benefits from the connectivity that air transport provides, making it easier to serve customers, receive supplies or transport products. What’s more, aviation’s growth also contributes to achieving almost all of the UN’s Sustainable Development Goals (SDGs),” said Walsh.
Performance
Overall financial performance is expected to improve in 2025 due to lower jet fuel prices and efficiency gains. Further growth is being held back by forced capacity discipline resulting from unresolved supply chain issues. This is limiting growth opportunities and increasing several cost areas, including aircraft leasing and maintenance.
Net profitability will also be reduced as airlines are expected to run through their tax losses accumulated during the pandemic, which will lead to higher tax rates in 2025.
Revenue
Revenues are expected to grow 4,4% to $1,007 trillion in 2025.
enger Revenues are expected to reach $705 billion (70% of total revenue) with an additional $145 billion (14,4% of total revenue) from ancillary services in 2025. Travel continues to become more affordable as enger yield is expected to decline by 3,4% (ticket and ancillary). Unit revenues are expected to decline by a more moderate 2,5%.
Put another way, the average airfare in 2025, including ancillary expenses, is expected to be $380, which is 1,8% lower than in 2024. In real (inflation-adjusted) , this represents a 44% drop compared to 2014, indicating that significant value is being ed on to consumers in the industry’s ongoing effort to improve efficiency.
enger demand (RPKs) is forecast to grow 8,0% in 2025, ahead of an expected capacity expansion (ATK) of 7,1%. Aircraft departures are expected to reach 40 million, up 4,6% from 2024, and the average enger load factor is anticipated at 83,4%, up 0,4 percentage points from 2024.
IATA’s public opinion survey confirms an optimistic outlook for enger demand. Looking ahead to the next 12 months compared to the last 12 months:
- 41% of travelers surveyed said they expect to travel more, 53% expect to travel as often, and 5% expect to travel less.
- 47% of travelers surveyed said they expect to spend more on travel, 46% expect travel spending to remain the same, and 8% expect to spend less.
Cargo revenues are expected to reach US$157 billion (15,6% of total revenues) in 2025. Demand is expected to grow by 6,0%, with average throughput adjusting downwards by 0,7% but still remaining well above pre-pandemic levels. Freight rates (quoted in 2014 dollars/kg) are expected to be US$1,34, US$0,06 lower than in 2024 and 24,4% below 2014 levels.
Several trends are expected to remain favorable for air cargo in 2025. These include continued geopolitical uncertainty in maritime shipments routed through the Suez Canal and growing e-commerce originating in Asia.
Costs
Costs are expected to rise 4,0% to $940 billion in 2025.
Non-combustible: Higher costs were seen across the board in 2024, outside of fuel, putting pressure on margins. Key cost issues included intense wage pressure and one-off expenses related to multiple airline employee strikes in 2024. In addition, there was a sharp increase in maintenance costs due to grounded aircraft and an aging global fleet. Overall non-fuel unit costs increased 1,3% in 2024 to a total of $643 billion. Non-fuel unit cost increases in 2025 are expected to be limited to 0,5%, reaching $692 billion.
The largest non-fuel cost is labor. In 2025, labor costs are expected to total $253 billion, an increase of 7,6% from 2024. With productivity gains, however, average unit labor costs are likely to increase by only 0,5% in 2025 compared to 2024. The airline workforce is expected to increase by 4% to 3,3 million people.
Fuel: Jet fuel prices fell to $70/barrel in September 2024 for the first time since the start of the Russia-Ukraine War. In 2025, jet fuel is expected to average $87/barrel (down from $99/barrel in 2024), based on a jet fuel crack spread of $12/barrel and a crude oil price of $75/barrel (Brent). As a result, cumulative airline fuel spend is expected to be $248 billion, a decline of 4,8%, despite a 6% increase in the amount of fuel expected to be consumed (107 billion gallons). Fuel is expected to for 26,4% of operating costs in 2025, down from 28,9% in 2024.
The cost of CORSIA compliance (purchasing carbon credits) began in 2024 and is estimated at $700 million, rising to $1 billion in 2025. The costs of limited quantities of sustainable aviation fuel available are expected to add $3,8 billion to industry fuel costs in 2025, up from $1,7 billion in 2024.
Risks
With strong geopolitical and economic uncertainties, the most significant risks to the sector's outlook include:
- Conflict: A worsening outlook if wars in Europe and the Middle East spread. On the other hand, achieving peace in any conflict is likely to have a positive impact, particularly in the case of the Russia-Ukraine War.
- Trump istration : The new Trump istration in the US brings with it several significant uncertainties. Tariffs and trade wars would likely reduce demand for air cargo and potentially impact business travel as well. If these policies reignite inflation with higher interest rates as a policy response, the negative impacts on demand would be exacerbated. However, if the business-friendly stance of the first Trump istration continues into this term, the gains from deregulation and business simplification could be significant. There is uncertainty about the government’s for US aviation decarbonization efforts until the path the new istration will take becomes clearer.
- Oil prices: Lower oil prices and resulting fuel costs are the main drivers of the improved outlook for airlines in 2025. Should this fail to materialize for whatever reason, and given the industry’s tight margins, the outlook could change significantly.
Regional summary
All regions are expected to show improved financial performance in 2025 compared to 2024, and all regions are expected to report collective net profits in both 2024 and 2025. Profitability, however, varies widely by carrier and by region. For example, the collective net profit margin of African airlines is expected to be the weakest, at 0,9%, while carriers in the Middle East are likely to be the strongest, at 8,2%.
North America
|
Net Profit 2024 (e) |
Net profit 2025 (f) |
Demand 2025 (RPK) | CAPACITY 2025 (ask) |
|---|---|---|---|
|
$11,8 billion (3,6%) $ 10,3 |
$13,8 billion (4,2%) $ 11,8 |
+ 3,0 %
|
+ 2,8 %
|
North America continues to generate the highest absolute profits, albeit at lower levels than before the pandemic. This is due to pronounced supply chain vulnerabilities in the low-cost sector. Slower deliveries of next-generation aircraft and reliance on individual aircraft types have hit this segment particularly hard, while rising wages have reduced the competitive advantage of low-cost carriers (LCCs) over network carriers. Profitability is expected to improve in 2025, although some issues, such as employee strikes and IT incidents, will have impacts that are likely to carry over into the new year.
Europe
|
Net Profit 2024 (e) |
Net profit 2025 (f) |
Demand 2025 (RPK) | CAPACITY 2025 (ask) |
|---|---|---|---|
|
$10,0 billion (3,9%) $ 8,2 |
$11,9 billion (4,4%) $ 9,2 |
+ 7,0 %
|
+ 6,5 %
|
Europe has faced several challenges that will impact competitiveness in 2024, including rising wages, fleet groundings, noise-related flight restrictions, increased airport charges, onerous regulations and high domestic taxes. The ongoing war in Ukraine continues to affect carriers on the continent with 20% of its airspace closed, resulting in longer routes to some destinations in Asia, as Russian airspace remains off-limits to European carriers. However, 2025 is expected to see a slight improvement in profitability, driven largely by the LCC sector, as it turns its back on the 2024 peak in fleet groundings due to supply chain issues.
Asia Pacific
|
Net Profit 2024 (e) |
Net profit 2025 (f) |
Demand 2025 (RPK) | CAPACITY 2025 (ask) |
|---|---|---|---|
|
$3,2 billion (1,3%) $ 1,8 |
$3,6 billion (1,4%) $ 1,8 |
+ 11,7 %
|
+ 10,8 %
|
Asia-Pacific Asia Pacific is the largest market in of RPKs, with China ing for over 40% of the region’s traffic. In 2024, RPKs grew by 18,6%, fueled in part by market stimulus from visa easing in several countries, including China, Vietnam, Malaysia and Thailand. Chinese carriers reported net losses in the first half of 2024 as a result of supply chain issues, oversupply in the domestic market and a cap of 100 weekly frequencies from China to the US (a third lower than before the pandemic). Asia-Pacific also saw the sharpest decline in yields in 2024. Thanks to strong demand and rising load factors, a slight improvement in profitability is likely in 2025.
Latin America
|
Net Profit 2024 (e) |
Net profit 2025 (f) |
Demand 2025 (RPK) | CAPACITY 2025 (ask) |
|---|---|---|---|
|
$1,0 billion (2,1%) $ 3,2 |
$1,3 billion (2,4%) $ 3,8 |
+ 8,0 %
|
+ 7,9 %
|
Latin America It is home to both thriving airlines and airlines experiencing significant financial difficulties, including Chapter 11 bankruptcy proceedings. Currency depreciations in some countries with significant domestic operations have created significant challenges, as major cost items such as fleet expenses and debt service are paid in US dollars. Profitability is expected to improve in 2025 as carriers emerge from Chapter 11 restructuring with increased competitiveness and exchange rates are likely to move in a direction favorable to carriers in the region.
Middle East
|
Net Profit 2024 (e) |
Net profit 2025 (f) |
Demand 2025 (RPK) | CAPACITY 2025 (ask) |
|---|---|---|---|
|
$5,3 billion (7,7%) $ 23,1 |
$5,9 billion (8,2%) $ 23,9 |
+ 9,5 %
|
+ 9,2 %
|
O Middle East delivered the best financial performance in 2024, as indicated by the highest net profit per enger among regions. Airlines benefited from the region’s robust economic performance, strategic infrastructure investments, ive government policies, and the closure of Russian airspace to European, American, and some Asian carriers. The Middle East was the only region to experience an increase in enger yields in 2024, ed by a strong long-haul business. Yields could stabilize in 2025 due to expected capacity expansion. Despite the escalation of the conflict in Gaza, Gulf carriers remained largely unchanged. Ambitious growth targets for 2025 could be impacted by supply chain issues with aircraft delivery delays and limited engine availability.
Africa
|
Net Profit 2024 (e) |
Net profit 2025 (f) |
Demand 2025 (RPK) | CAPACITY 2025 (ask) |
|---|---|---|---|
|
$0,1 billion (0,8%) $ 0,9 |
$0,2 billion (0,9%) $ 1,0 |
+ 8,0 %
|
+ 7,7 %
|
African carriers face high operating costs and a low propensity to spend on air travel in many of their domestic markets. A significant challenge is the shortage of US dollars in some economies, which, together with infrastructure and connectivity challenges, hinder the expansion and performance of the airline industry. Despite these obstacles, there is sustained demand for air travel, which should improve the region’s profitability marginally by 2025.
The traveler's point of view
Air travel continues to deliver value to consumers. A recent public opinion survey (14 countries, 6.500 respondents who had taken at least one trip in the past year) found that 96% of travelers expressed satisfaction with their travel. Additionally, 88% agreed that air travel makes their lives better and 78% agreed that air travel is good value for money.
engers are counting on a safe, sustainable, efficient and profitable airline industry. IATA’s public opinion research has demonstrated the important role that travelers see the airline industry playing:
- 90% agreed that air travel is a necessity for modern life
- 90% agreed that air connectivity is essential for the economy
- 88% said air travel has a positive impact on societies and
- 83% said the global air transport network is a key contributor to the UN SDGs
- 84% are concerned about the success of the aviation industry
The airline industry is committed to its goal of achieving net-zero CO2 emissions by 2050. Travelers are expressing high levels of confidence in this effort, with 81% agreeing that the industry is demonstrating commitment to working together to achieve its ambitious target, and 77% agreeing that aviation leaders are taking the climate challenge seriously.
Via IATA
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