The International Air Transport Association (IATA) has released its financial outlook for the global airline industry in 2025, projecting a modest improvement in profitability despite ongoing cost pressures and supply chain disruptions.

Key Financial Projections

• Net Profit: The industry is expected to generate $36.6 billion in net profits, reflecting a 3.6% net profit margin. This marks an increase from the $31.5 billion projected for 2024 (3.3% net profit margin).

• Operating Profit: Expected to reach $67.5 billion, with a 6.7% operating margin, slightly up from 6.4% in 2024.

• Return on Invested Capital (ROIC): Projected at 6.8%, improving from 6.6% in 2024, though still trailing the industry's weighted average cost of capital.

• Revenue Growth: Industry revenues are forecasted to exceed $1 trillion for the first time, increasing 4.4% from 2024 to reach $1.007 trillion.

• Passenger Traffic: The number of airline passengers is set to surpass 5.2 billion, a 6.7% increase from 2024, marking a new record.

• Cargo Volume: Expected to rise 5.8% to 72.5 million tonnes.

Navigating Profitability Amid Challenges

"Airlines are set to deliver a hard-earned global profit of $36.6 billion in 2025, capitalizing on lower fuel prices, strong load factors above 83%, cost discipline, and investments in decarbonization," said Willie Walsh, IATA’s Director General. "However, persistent supply chain bottlenecks, regulatory burdens, infrastructure inefficiencies, and rising taxation continue to weigh on profitability."

Walsh also underscored the industry's razor-thin margins: "Despite crossing the $1 trillion revenue mark, airlines will still carry $940 billion in costs. The net profit per passenger will be just $7, leaving little room for financial shocks. The industry must continue to push for cost efficiency, particularly from monopoly infrastructure providers who often underperform."

Aviation's Broader Economic Impact

The aviation sector remains a vital driver of global economic growth. Airline employment is expected to increase to 3.3 million in 2025, contributing to a wider aviation value chain that supports 86.5 million jobs and generates $4.1 trillion in economic activity—equivalent to 3.9% of global GDP (2023 figures).

"In 2025, for the first time, air travel will exceed five billion passengers, with total flights surpassing 40 million. This surge in connectivity will stimulate economic activity across multiple sectors, from hospitality to retail, and facilitate global trade and commerce," Walsh added.

Revenue and Cost Drivers

Passenger Revenue

• Projected to reach $705 billion, making up 70% of total industry revenue.

• Ancillary revenues are expected to contribute $145 billion (14.4% of total revenue).

• Average airfare, including ancillaries, will be $380, down 1.8% from 2024.

• Passenger demand (RPKs) is forecasted to grow by 8.0%, outpacing a 7.1% expansion in capacity (ATK).

• Load factors will rise to 83.4%, reflecting sustained demand.

Cargo Revenue

• Expected to total $157 billion, representing 15.6% of total industry revenue.

• Demand growth of 6.0%, with only a 0.7% decline in yields, keeping rates well above pre-pandemic levels.

• Freight rates are forecasted at $1.34/kg (in 2014 dollars), a 24.4% decrease from 2014 levels.

• Continued geopolitical uncertainties in maritime shipping and booming e-commerce, particularly from Asia, are expected to support demand.

Cost Pressures

• Total industry costs are set to rise 4.0% to $940 billion.

• Labor costs: Projected to increase 7.6% to $253 billion, though productivity gains will limit unit labor cost growth to 0.5%.

• Fuel costs: Jet fuel prices are expected to average $87/barrel, down from $99/barrel in 2024, reducing the industry’s fuel bill by 4.8% to $248 billion.

• Sustainable Aviation Fuel (SAF): Compliance costs under the CORSIA carbon offset scheme will rise to $1 billion, while SAF expenses will increase to $3.8 billion, nearly doubling from 2024.

Industry Risks and Uncertainties

IATA identified key risks that could impact the 2025 outlook:

1. Geopolitical Instability: Escalating conflicts in Europe and the Middle East could disrupt operations, while peace in the Russia-Ukraine war could positively impact industry growth.

2. U.S. Policy Changes: The incoming Trump Administration introduces uncertainty regarding trade policies, tariffs, and aviation decarbonization support. Business-friendly deregulation could benefit the industry, while trade wars and inflationary pressures pose risks.

3. Oil Price Volatility: The industry's recovery is tied to fuel costs. Any unexpected rise in oil prices could significantly alter profitability projections.

Regional Performance Trends

All global regions are expected to post improved financial results in 2025. However, profitability remains uneven:

• Middle Eastern carriers are expected to lead with an 8.2% net margin.

• European and Latin American airlines are projected to generate returns exceeding their cost of capital.

• African carriers are likely to report the weakest profitability, with a 0.9% net margin.

The airline industry in 2025 is poised for another year of growth, albeit with tight margins and external pressures. While lower jet fuel prices, operational efficiency, and passenger demand will support financial performance, airlines must remain vigilant in managing costs and advocating for regulatory and infrastructure improvements to sustain profitability.

As the aviation sector continues its post-pandemic expansion, IATA’s projections highlight the industry's role as a vital economic enabler, linking businesses, creating jobs, and driving global connectivity