Market Intelligence: Far East & China

Global – The International Air Transport Association (IATA) has projected a modest rise in global airline profitability for 2025. The updated outlook, released during the IATA summit in New Delhi, outlines that while net profits are expected to grow compared to 2024, they will fall short of earlier projections due to geopolitical tensions, supply chain constraints, and persistent cost pressures.

IATA estimates net profits will reach $36 billion in 2025 (a 3.7% net margin), slightly below the $36.6 billion forecasted in December 2024. While total revenues are expected to hit a historic $979 billion, airlines continue to operate under tight margins, with an average per-passenger profit of $7.20.

Despite a global GDP slowdown to 2.5% and weakening air cargo performance, falling jet fuel prices and increasing efficiency gains have allowed the industry to maintain a positive trajectory. Fleet modernization and surging passenger demand are also credited for the industry’s resilience, though challenges remain in SAF adoption, aircraft availability, and regional volatility.

• Profitability: Net profits projected at $36B in 2025, up from $32.4B in 2024.

• Revenue: Total industry revenues to hit record $979B (+1.3%), driven by strong passenger growth.

• Passenger Metrics: 4.99B passengers forecasted, 84% average load factor, $374 average airfare.

• Cargo Decline: Revenues to fall 4.7% due to protectionism, weaker yields, and slower growth.

• Fuel Impact: Jet fuel at $86/barrel (down from $99), with SAF costs posing pricing pressures.

• Fleet Challenges: Aircraft delivery shortfalls, engine issues, and a 17,000+ aircraft backlog.

• Risks: Trade wars, oil volatility, geopolitical tensions, regulatory fragmentation.

• Regional Outlook:

  • Middle East: Highest profitability margin (8.7%).

  • Africa: Lowest margin (1.3%) due to high costs and infrastructure gaps.

  • North America: Strong absolute profits but hampered by crew and engine shortages.

  • Europe: Buoyed by LCC growth and open skies.

  • Asia-Pacific: Strong demand but slowed by China’s economic uncertainty.

  • Latin America: Only region forecasted to decline in profitability.

Statements:

“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. The biggest positive driver is the price of jet fuel which has fallen 13% compared with 2024 and 1% 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% in 2024 to 3.7% 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,” said Willie Walsh, IATA’s Director General.

“Perspective is critical to put into context such large industry-wide aggregate figures. Earning a $36 billion profit is significant. But that equates to just $7.20 per passenger per segment. It’s still a thin buffer and any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry’s resilience to the test. Policymakers who rely on airlines as the core of a value chain that employs 86.5 million people and supports 3.9% of global economic activity, must keep this clearly in focus,” said Walsh.

Source: IATA