The International Air Transport Association (IATA) announced its financial outlook for the global airline industry in 2025, which shows a slight strengthening of profitability amid ongoing cost and supply chain challenges. Highlights include:

• Net profits are expected to be $36.6 billion in 2025 for a 3.6% net profit margin. That is a slight improvement from the expected $31.5 billion net profit in 2024 (3.3% net profit margin). Average net profit per passenger is expected to be $7.0 (below the $7.9 high in 2023 but an improvement from $6.4 in 2024).
• Operating profit in 2025 is expected to be $67.5 billion for a net operating margin of 6.7% (improved from 6.4% expected in 2024).
• The return on invested capital (ROIC) for the global industry is expected to be 6.8% in 2025. While this is an improvement from the 2024 ROIC of 6.6%, the returns for the industry at the global level remain below the weighted average cost of capital. ROIC is the strongest for airlines in Europe, the Middle East, and Latin America, where it did exceed the cost of capital.
• Total industry revenues are expected to be $1.007 trillion. That is an increase of 4.4% from 2024 and will be the first time that industry revenues top the $1 trillion mark. Expenses are expected to grow by 4.0% to $940 billion.
• Passenger numbers are expected to reach 5.2 billion in 2025, a 6.7% rise compared to 2024 and the first time that the number of passengers has exceeded the five billion mark.
• Cargo volumes are expected to reach 72.5 million tonnes, a 5.8% increase from 2024.

“We’re expecting airlines to deliver a global profit of $36.6 billion in 2025. This will be hard-earned as airlines take advantage of lower oil prices while keeping load factors above 83%, tightly controlling costs, investing in decarbonization, and managing the return to more normal growth levels following the extraordinary pandemic recovery. All these efforts will help to mitigate several drags on profitability which are outside of airlines’ control, namely persistent supply chain challenges, infrastructure deficiencies, onerous regulation, and a rising tax burden,” said Willie Walsh, IATA’s Director General.

“In 2025, industry revenues will exceed $1 trillion for the first time. It’s also important to put that into perspective. A trillion dollars is a lot—almost 1% of the global economy. That makes airlines a strategically important industry. But remember that airlines carry $940 billion in costs, not to mention interest and taxes. They retain a net profit margin of just 3.6%. Put another way, the buffer between profit and loss, even in the good year that we are expecting of 2025, is just $7 per passenger. With margins that thin, airlines must continue to watch every cost and insist on similar efficiency across the supply chain—especially from our monopoly infrastructure suppliers who all too often let us down on performance and efficiency,” said Walsh.

IATA highlighted the broad benefits of growing connectivity. The most recent estimates show that airline employment is expected to grow to 3.3 million in 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, accounting for 3.9% of global GDP (2023 figures). Connectivity is an economic catalyst for growth in nearly all industries.

“Looking at 2025, for the first time, traveler numbers will exceed five billion and the number of flights will reach 40 million. This growth means that aviation connectivity will be creating and supporting jobs across the global economy. The most obvious are the hospitality and retail sectors which will gear 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 meet customers, receive supplies, or transport products. On top of this, growth in aviation also contributes to achieving almost all the UN’s Sustainable Development Goals (SDGs),” said Walsh.

Outlook Drivers

Overall financial performance is expected to improve in 2025 on the back of lower jet fuel prices and efficiency gains. Further increases are being held back by forced capacity discipline resulting from unresolved supply chain issues. This is limiting growth opportunities and driving up several cost areas, including aircraft leasing and maintenance.

Net profitability will also be squeezed as airlines are expected to exhaust their tax losses carry forwards from the pandemic era, leading to an increase in tax rates in 2025.

Revenue

Revenues are expected to grow by 4.4% to $1.007 trillion in 2025.

Passenger Revenues are expected to reach $705 billion (70% of total revenue) with an additional $145 billion (14.4% of total revenues) from ancillary services in 2025. Travel continues to become more affordable as the passenger yield is expected to fall by 3.4% (ticket and ancillaries). Unit revenues are expected to fall by a more moderate 2.5%.

Seen a different way, the average airfare in 2025, including ancillaries, is expected to be $380, which is 1.8% lower than 2024. In real terms (adjusted for inflation) that represents 44% drop compared to 2014, indicating that significant value is being passed to consumers in the industry’s continued effort to improve efficiency.

Passenger demand (RPKs) is expected to grow by 8.0% in 2025, which is ahead of a 7.1% expected expansion of capacity (ATK). Aircraft departures are forecast to reach 40 million, an increase of 4.6% from 2024, and the average passenger load factor is anticipated at 83.4%, up 0.4 percentage points from 2024.

IATA’s public opinion polling confirms an optimistic outlook for passenger demand. Looking at the next 12 months compared to the last 12 months:

• 41% of surveyed travelers said they expect to travel more, 53% expected to travel at the same frequency, and 5% expect to travel less.
• 47% of surveyed travelers said they expect to spend more on travel, 46% expected travel expenditure to remain the same, and 8% expected to spend less.

Cargo Revenues are expected to reach $157 billion (15.6% of total revenues) in 2025. Demand is likely to grow by 6.0% with average yield adjusting downwards by 0.7%, but still remaining well above pre-pandemic levels. Freight rates (quoted in 2014 dollars/kg) are expected to be $1.34, $0.06 less than in 2024 and 24.4% below 2014 levels.

Several trends are expected to continue to be favorable for air cargo in 2025. These include continued geopolitical uncertainty in sea shipments routed through the Suez Canal and booming e-commerce originating in Asia.

Costs

Costs are expected to grow by 4.0% to $940 billion in 2025.

Non-fuel: Higher costs were seen across the board in 2024, outside of fuel, putting pressure on margins. Key cost issues included intense salary pressure and one-off expenses related to several airline employee strikes in 2024. Additionally, there has been a sharp increase in maintenance costs because of aircraft groundings and an aging global fleet. Overall non-fuel unit costs rose 1.3% in 2024 for 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 of the non-fuel costs is labor. In 2025, labor costs are expected to total $253 billion, up 7.6% from 2024. With productivity gains, however, average labor unit costs are likely to rise by only 0.5% in 2025 compared to 2024. The airline labor force is anticipated to rise 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 per barrel and a crude oil price of $75/barrel (Brent). As a result, airlines’ cumulative fuel spend is expected to be $248 billion, a decline of 4.8% despite a 6% rise in the amount of fuel expected to be consumed (107 billion gallons). Fuel is expected to account for 26.4% of operating costs in 2025, down from 28.9% in 2024.

Cost of compliance with CORSIA (purchasing carbon credits) started to be realized in 2024 and is estimated at $700 million, rising to $1 billion in 2025. The costs for the 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 industry outlook include:

• Conflict: A worsening of prospects should the wars in Europe and the Middle East spread. Conversely, achieving peace in either conflict is likely to have a positive impact, particularly in the case of the Russia-Ukraine War.
• Trump Administration: The incoming Trump Administration in the US brings with it several significant uncertainties. Tariffs and trade wars would likely dampen demand for air cargo and potentially also impact business travel. Should these policies rekindle inflation with higher interest rates as a policy response, negative impacts on demand would be exacerbated. However, should the business-friendly stance of the first Trump administration continue into this term, gains from deregulation and business simplification could be significant. There is uncertainty regarding government support for aviation’s decarbonization efforts in the US until the path that the new administration will take becomes clearer.
• Oil Prices: Lower oil prices and resulting fuel costs are a major driver of improved prospects for airlines in 2025. Should these not materialize for any reason and considering the industry’s thin margins, the outlook could change significantly.

Regional Roundup

All regions are expected to show improved financial performance in 2025 as compared to 2024, and all regions are expected to deliver a collective net profit 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 most likely to be the strongest at 8.2%.


North America continues to generate the largest absolute profit, albeit at lower levels than prior to the pandemic. This is due to pronounced supply chain vulnerabilities in the low-cost sector. Slower next-gen aircraft deliveries and reliance on single aircraft types has particularly affected this segment while rising wages have reduced the low cost carriers’ (LCC) competitive advantage against network carriers. Profitability is expected to improve in 2025 even as some issues such as employee strikes and IT incidents have impacts that are likely to carry-over into the new year.


Europe faced numerous challenges impacting competitiveness in 2024, including rising wages, fleet groundings, noise-related flight restrictions, increasing airport charges, onerous regulations, and high national taxes. The ongoing war in Ukraine continues to affect the continent’s carriers with 20% of its airspace closed, resulting in longer routes to some Asia destinations as Russian airspace remains off-limits to European carriers. Nonetheless, 2025 is expected to see a slight upturn in profitability largely driven by the LCC sector as it turns its back on the 2024 peak in fleet groundings due to supply chain issues.


Asia Pacific is the largest market in terms of RPK, with China accounting for over 40% of the region’s traffic. In 2024, RPKs grew by 18.6%, fueled in part by market stimulus from visa requirement relaxations for entry to several countries including China, Vietnam, Malaysia, and Thailand. Chinese carriers reported net losses in the first half of 2024 as a consequence of supply chain issues, over-supply in the domestic market, and a limitation of 100 weekly frequencies from China to the US (a third lower than pre-pandemic). Asia-Pacific has also experienced the sharpest drop in yields in 2024. Thanks to strong demand and increasing load factors, a slight improvement in profitability is likely in 2025.


Latin America is home both to airlines that are thriving and to airlines that are experiencing significant financial difficulties, including Chapter 11 bankruptcy proceedings. Currency depreciations in some countries with significant domestic operations have brought many challenges as major cost items, such as fleet expenses and debt servicing, are paid in US dollars. Profitability is expected to improve in 2025 as carriers emerge from Chapter 11 restructuring with stronger competitiveness and as exchange rates will likely move in a direction favorable to the region’s carriers.


The Middle East achieved the strongest financial performance in 2024 as indicated by the highest per passenger net profit among the regions. Airlines have benefitted from the region's robust economic performance, strategic infrastructure investments, supportive government policies, and from the closure of Russian airspace to European, American, and some Asian airlines. The Middle East was the only region to experience an increase in passenger yields in 2024, supported by a strong premium long-haul business. Yields may stabilize in 2025 due to the expected capacity expansion. Despite the escalation of the conflict in Gaza, the Gulf carriers have remained largely unaffected. Ambitious growth targets for 2025 could be impacted by supply chain issues with delays in aircraft deliveries and limited engine availability.


Africa’s carriers face high operational costs and a low propensity for air travel expenditure in many of their home markets. A significant issue is a shortage of US dollars in some economies which, along with infrastructure and connectivity challenges hinder the airline industry’s expansion and performance. Despite these obstacles, there is sustained demand for air travel, which is expected to improve the region’s profitability marginally in 2025.

The Traveler’s Viewpoint

Air travel continues to deliver value to consumers. A recent public opinion poll (14 countries, 6,500 respondents who have taken at least one trip in the last year) revealed that 96% of travelers expressed satisfaction with their travel. Moreover, 88% agreed that air travel makes their lives better and 78% agreed that air travel is good value for money.

Passengers are counting on a safe, sustainable, efficient, and profitable airline industry. IATA public opinion polling 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 critical to the economy
• 88% said that air travel has a positive impact on societies, and
• 83% said that the global air transport network is a key contributor to the UN SDGs
• 84% care about the success of the aviation industry

The air transport industry is committed to its goal of achieving net zero CO2 emissions by 2050. Travelers are expressing high levels of confidence in this endeavor with 81% agreeing that the industry is demonstrating commitment to work together to achieve its ambitious goal, 77% agreeing that aviation leaders are taking the climate challenge seriously.