Airline revenues to hit near US$1 trillion record in 2025 even as trade tensions bite: Iata
Outlook this year is good as Apac continues to lead growth, but drag is expected from US tariffs and industry supply chain issues
[SINGAPORE] Airlines’ revenues will hit a record of close to US$1 trillion in 2025 with a stable net profit of US$36 billion.
But US tariffs are a drag on the industry, as airline performance and the growth in both air passengers and cargo numbers are down from estimates made at the end of 2024, said the International Air Transport Association (Iata) on Monday (Jun 2).
“The first half of 2025 has 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,” said Iata director-general Willie Walsh.
Iata, which is the global trade organisation for airlines, said in its 2025 aviation industry outlook report that airline revenue for the year is projected to increase 1.3 per cent from 2024 to US$979 billion. That is a new all-time high, although below the US$1 trillion previously put forward at the end of 2024.
Net profit will improve to US$36 billion from US$32.4 billion in 2024, also below the original projection of US$36.6 billion.
Net profit margins will improve to 3.7 per cent from 3.4 per cent in 2024, and outdo the original projection of 3.6 per cent.
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Higher, but thinner air
Speaking at Iata’s annual general meeting in New Delhi, Walsh said that he anticipates “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”, he added.
Iata’s expected airline performance figures are not just a result of improved passenger and cargo numbers as the reduced cost of jet fuel will also trim operating expenses.
Like airline revenues and profits, the passenger and cargo numbers are expected to grow in 2025, but less than originally forecast.
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Total air traveller numbers will increase 4 per cent to five billion (original forecast 5.2 billion) while total air cargo volume is expected to tick upwards 0.6 per cent to 69 million tonnes (original forecast 72.5 million tonnes).
Total demand for air travel is expected to grow by 5.8 per cent year on year, measured in revenue passenger kilometres (RPK), down from the original prediction of 8 per cent. In 2024, it increased 10.6 per cent, compared to 2023.
The Asia-Pacific is still expected to lead the world in industry growth at 9 per cent year on year, and will contribute 52 per cent of the industry’s RPK growth in 2025, a result of its continued economic growth and reduced visa requirements in several countries including China, Vietnam, Malaysia and Thailand.
North America will be the slowest-growing market, expanding just 0.4 per cent on uncertainty from tariffs and migration policies.
The price of jet fuel – expected to average US$86 per barrel in 2025 – has fallen 13 per cent compared to 2024 and is the “biggest positive driver”, said Walsh.
That will translate into a total fuel bill reduction of around 10 per cent to US$236 billion, compared with S$261 billion in 2024.
However, Iata predicts total expenses for 2025 to increase 1 per cent to S$913 billion as a result of the costs of capital, labour, and aircraft maintenance and ownership.
Some headwinds
Air travel demand is traditionally driven by gross domestic product. Despite global GDP growth slowing to 2.5 per cent from 3.3 per cent in 2024 – largely a result of trade slowdowns and uncertainty brought about by US tariffs – Iata expects airline profitability to improve in 2025 as oil prices continue to fall, employment remains strong and inflation projections remain moderate.
But Walsh warned that airline margins remain relatively thin, the industry’s supply chain problems will remain a continual drag, and its sustainability efforts remain at a nascent stage.
“While (the forecasts) are big numbers, let’s remember this equates to a net margin of a mere 3.7 per cent or US$7.20 net profit per passenger,” he said, which is only half of what all global industries achieve on average.
Iata notes that while tariffs affect the global economy, it does not anticipate large-scale impacts on passenger traffic for the industry as a whole.
Aviation’s persistent supply chain problems, however, will still dampen growth, as aircraft manufacturer deliveries continue to slow.
The backlog of aircraft orders reached a record high of 17,000 at the end of 2024 as deliveries continue to be stymied. In 2025, 1,692 aircraft are expected to be delivered, 26 per cent less than year-ago estimates.
Iata indicates airlines are lacking 5,400 aircraft or almost 20 per cent of the active global fleet, which could take around three to five years to resolve.
This is in addition to engine problems and spare parts shortages that have grounded planes, with the number of aircraft less than 10 years old currently in storage now more than 1,100, or around 3.8 per cent of the total fleet, compared to 1.3 per cent from 2015 to 2018.
Walsh also called on sustainable aviation fuel producers and governments to boost production of sustainable aviation fuel, a key method of achieving the sector’s goal of net-zero carbon emissions by 2050.
Governments must focus on “delivering policy actions and certainty, preferably production incentives, that have a track record of success…” while sustainable aviation fuel producers “...must stop procrastinating and get to work at ramping-up production capacity”.
Sustainable aviation fuel production will double to two million tonnes in 2025, but meet only 0.7 per cent of airline needs.
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