Travel News

The International Air Transport Association (IATA) announced its financial outlook for the global airline industry in 2025, showing a growth in revenue to $1.007 trillion on the back of operational cost reduction.

This is an increase of 4.4% from 2024 and will be the first time that industry revenues top the $1 trillion mark. However, expenses are expected to grow by 4.0 per cent to $940 billion. IATA also projects that globally, there would be a slight strengthening of profitability amid ongoing cost and supply chain challenges.

“We’re expecting airlines to deliver a global profit of $36.6 billion in 2025. This will be hard-earned as airlines take advantage of lower oil prices while keeping load factors above 83 percent, tightly controlling costs, investing in decarbonization, and managing the return to more normal growth levels following the extraordinary pandemic recovery. All these efforts will help to mitigate several drags on profitability which are outside of airlines’ control, namely persistent supply chain challenges, infrastructure deficiencies, onerous regulation, and a rising tax burden,” said Willie Walsh, IATA’s Director General.

“In 2025, industry revenues will exceed $1 trillion for the first time. It’s also important to put that into perspective. A trillion dollars is a lot—almost one per cent of the global economy. That makes airlines a strategically important industry. 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 per cent. Put another way, the buffer between profit and loss, even in the good year that we are expecting in 2025, is just $7 per passenger. With margins that thin, airlines must continue to watch every cost and insist on similar efficiency across the supply chain—especially from our monopoly infrastructure suppliers who all too often let us down on performance and efficiency,” said Walsh.

Net profits are expected to be $36.6 billion in 2025 for a 3.6 per cent net profit margin. That is a slight improvement from the expected $31.5 billion net profit in 2024 (3.3 per cent net profit margin). The average net profit per passenger is expected to be $7.0 (below the $7.9 high in 2023 but an improvement from $6.4 in 2024).

Operating profit in 2025 is expected to be $67.5 billion for a net operating margin of 6.7 per cent (improved from 6.4% expected in 2024).

The return on invested capital (ROIC) for the global industry is expected to be 6.8 per cent in 2025. While this is an improvement from the 2024 ROIC of 6.6 per cent, the returns for the industry at the global level remain below the weighted average cost of capital. ROIC is the strongest for airlines in Europe, the Middle East, and Latin America, where it did exceed the cost of capital.

Passenger numbers are expected to reach 5.2 billion in 2025, a 6.7 per cent rise compared to 2024 and the first time that the number of passengers has exceeded the five billion mark.

Cargo volumes are expected to reach 72.5 million tonnes, a 5.8 per cent increase from 2024. IATA highlighted the broad benefits of growing connectivity. The most recent estimates show that airline employment is expected to grow to 3.3 million in 2025. Airlines are the core of a global aviation value chain that employs 86.5 million people and generates $4.1 trillion in economic impact, accounting for 3.9 per cent of global GDP (2023 figures).  Connectivity is an economic catalyst for growth in nearly all industries.

“Looking at 2025, for the first time, traveller numbers will exceed five billion and the number of flights will reach 40 million. This growth means that aviation connectivity will be creating and supporting jobs across the global economy.

“The most obvious are the hospitality and retail sectors which will gear up to meet the needs of a growing number of customers. But almost every business benefits from the connectivity that air transport provides, making it easier to meet customers, receive supplies, or transport products. On top of this, growth in aviation also contributes to achieving almost all the UN’s Sustainable Development Goals (SDGs),” said Walsh.

Passenger Revenues are expected to reach $705 billion (70 per cent of total revenue) with an additional $145 billion (14.4 per cent of total revenues) from ancillary services in 2025. Travel continues to become more affordable as the passenger yield is expected to fall by 3.4 per cent (ticket and ancillaries). Unit revenues are expected to fall by a more moderate 2.5 per cent.

Seen a different way, the average airfare in 2025, including ancillaries, is expected to be $380, which is 1.8 per cent lower than 2024. In real terms (adjusted for inflation) that represents s 44 per cent drop compared to 2014, indicating that significant value is being passed to consumers in the industry’s continued effort to improve efficiency.

Passenger demand (RPKs) is expected to grow by 8.0 per cent in 2025, which is ahead of a 7.1 per cent expected expansion of capacity (ATK). Aircraft departures are forecast to reach 40 million, an increase of 4.6 per cent from 2024, and the average passenger load factor is anticipated at 83.4 per cent, up 0.4 percentage points from 2024. Africa’s carriers face high operational costs and a low propensity for air travel expenditure in many of their home markets.

A significant issue is a shortage of US dollars in some economies which, along with infrastructure and connectivity challenges hinder the airline industry’s expansion and performance. Despite these obstacles, there is sustained demand for air travel, which is expected to improve the region’s profitability marginally in 2025.