Global airlines are expected to reach a significant milestone in 2025, with revenues projected by the International Air Transport Association (IATA) to hit $1.007 trillion for the first time.
The industry, however, will carry $940 billion in operating costs, not to mention interest and taxes, leaving a slim profit margin of 3.6%, amounting to $36.6 billion in net profit or about $7 per passenger.
The projection was contained in IATA’s financial outlook for the global airline industry for 2025.
“We’re expecting airlines to deliver a global profit of $36.6 billion in 2025. In 2025, industry revenues will exceed $1 trillion for the first time. 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%,” said Willie Walsh, IATA’s Director General.
“Revenues are expected to grow by 4.4% to $1.007 trillion in 2025,” a portion of the IATA report read.
The IATA report provided further insights into the projections, highlighting that passenger revenues are expected to contribute $705 billion, with ancillary services adding $145 billion. The average airfare, including ancillaries, is forecasted to decline to $380 in 2025.
Passenger demand is anticipated to grow by 8%, outpacing a 7.1% increase in capacity, while cargo revenues are projected at $157 billion, driven by e-commerce growth and geopolitical factors.
On the cost side, expenses are expected to reach $940 billion, driven by labor costs at $253 billion, fuel costs at $248 billion, and rising maintenance costs due to an aging fleet. While fuel prices are forecasted to stabilize, labour costs are set to increase by 7.6% as the workforce grows to 3.3 million employees, highlighting the persistent cost pressures facing the industry despite ongoing efficiency improvements.
More insight
The IATA projection for 2025 sheds light on regional airline performance, highlighting significant variations in profitability and growth.
According to IATA, African airlines are forecasted to post the weakest net profit margin at 0.9%, achieving a net profit of $0.2 billion, with passenger demand growing by 8.0% and capacity increasing by 7.7%.
- The Middle East is projected to be the most profitable region, with IATA forecasting a net profit of $5.9 billion, a margin of 8.2%, and per-passenger earnings of $23.9, driven by robust demand growth of 9.5% and strategic investments.
- Latin American carriers are expected to achieve a net profit of $1.3 billion, with a net margin of 2.4% and per-passenger earnings of $3.8, supported by an 8% increase in demand and a 7.9% rise in capacity.
- IATA anticipates that Asia-Pacific airlines will earn $3.6 billion in net profit, with a modest net margin of 1.4%, as passenger demand grows by 11.7%, slightly outpacing a 10.8% capacity increase.
- In North America, IATA forecasts the largest absolute profit at $13.8 billion, with a net margin of 4.2% and per-passenger earnings of $11.8. Passenger demand is expected to grow by 3%, ahead of a 2.8% capacity increase, aided by stronger network carrier performance despite operational challenges.
European airlines are projected to achieve a net profit of $11.9 billion, with a net margin of 4.4% and per-passenger earnings of $9.2, driven by low-cost carriers recovering from fleet and supply chain issues.
These projections from IATA reflect the diverse regional dynamics shaping the global airline industry’s outlook for 2025.