World airlines under the aegis of the International Air Transport Association (IATA) have projected a better year for the aviation industry and profitability, despite headwinds in 2025.
The projection, contained in the IATA 2025 Airline Industry Financial Outlook, identified the biggest positive driver of the projections to be the reduced price of jet fuel, which has fallen 13 per cent compared with 2024 and 1 per cent below previous estimates, as well as the rising passenger and cargo volumes.
Globally, the airline industry is forecast to achieve a net profit margin of 3.7 per cent in 2025, up from 3.4 per cent in 2024, with total operating profits reaching $66 billion.
The airline anticipated airlines flying more people and more cargo in 2025 than they did in 2024. In the regional performance category, however, Africa’s carriers are expected to contribute the smallest share, with just $200 million in profits representing a net margin of 1.1 per cent.
IATA attributed this to challenges facing African airlines, including high operational costs, limited access to aircraft and spare parts, severe foreign exchange constraints in several countries, among others.
“These conditions have stifled growth, but demand for air travel has remained strong across the continent. Africa’s carriers face high operational costs and a low propensity for air travel expenditure in many of their home markets. A shortage of aircraft and spare parts is dampening growth in the region.
“The shortage of foreign currency in some economies, particularly U.S. dollars, is adding to the region’s challenges. Despite these challenges, there is sustained demand for air travel in Africa,” the report read in part.
IATA’s Director-General, Willie Walsh, noted that the first half of 2025 brought significant uncertainties to global markets. Nonetheless, by many measures, including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections.
“The biggest positive driver is the price of jet fuel, which has fallen 13 per cent compared with 2024 and one per cent below previous estimates. Moreover, we anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence.
“The result is an improvement of net margins from 3.4 per cent in 2024 to 3.7 per cent in 2025. That’s still about half the average profitability across all industries. But considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify,” Walsh said.
According to the report, total revenues are expected to reach a record high of $979 billion, up 1.3 per cent on 2024 but below the $1 trillion forecast earlier. Operating profits are projected at $66 billion, up from an estimated $61.9 billion in 2024.
Cargo revenues are also expected to be $142 billion in 2025, showing an increase of 4.7 per cent in 2024. This is primarily based on the expected impact of reduced GDP growth largely influenced by trade-dampening protectionist measures, including tariffs.
As a result, air cargo growth is expected to slow to 0.7 per cent in 2025 (from 11.3 per cent in 2024). The cargo yield is also expected to reduce by 5.2 per cent, reflecting a combination of slower demand growth and lower oil prices.
Industry expenses are also expected to grow to $913 billion in 2025 (+1.0 per cent on 2024). Although jet fuel is expected to average $86/barrel in 2025 (well below the $99 average in 2024), translating into a total fuel bill of $236 billion, accounting for 25.8 per cent of all operating costs, representing $25 billion lower than the $261 billion in 2024.
Sustainable Aviation Fuel (SAF) production is expected to grow to two million tonnes (Mt) in 2025, accounting for just 0.7 per cent of airline fuel use. SAF production will double from the 1 Mt produced in 2024 (all of which was purchased by airlines), but production needs an exponential expansion to meet the demands of the industry’s commitment to net-zero carbon emissions by 2050.
IATA estimates that the average cost of SAF in 2024 was 3.1 times that of jet fuel, for a total additional cost of $1.6 billion. In 2025, the global average cost for SAF is expected to be 4.2 times that of jet fuel. This extra cost is largely the result of SAF’s ‘compliance fees’ being levied by European fuel suppliers to hedge their potential costs as a result of European SAF mandates to include 2 per cent SAF in the jet fuel supply.
Regionally, North America is expected to generate the highest absolute profit at $12.7 billion, despite economic slowdowns and pilot shortages. Europe’s carriers will benefit from strong passenger demand and a favourable currency exchange, with profits projected at $11.3 billion. The Middle East is forecast to deliver the strongest net profit margin at 8.7 per cent, supported by robust economic growth, generating $6.2 billion in profits.
Asia Pacific, the largest market by passenger traffic, is expected to see profits rise to $4.9 billion, fueled by easing visa restrictions and tourism growth.
Latin America faces challenges from weak currencies and regulatory pressures, with profits forecast to fall to $1.1 billion. Furthermore, the IATA report noted that passenger numbers worldwide are projected to reach a record 4.99 billion in 2025, a 4 per cent increase on 2024, although below earlier forecasts of 5.22 billion. Air cargo volumes are also expected to rise slightly to 69 million tonnes.
