While we all wonder about rising air ticket prices, IATA, the airline industry representative body, today projected that the consolidated global airline industry will make another bumper profit in 2025. However, before you go on, remember that a consolidated profit does not mean all airlines are making a profit; it is an aggregation.

IATA expects strengthened profitability for the industry in 2025.

Airlines are preparing for growing profits in 2025, continuing to build upon the cycle that began after the COVID-19 pandemic, a period in which they recorded a record aggregate loss of USD 138 billion in just one year. The uptick demonstrates the resilience of the airline industry in the face of challenges in an environment that remains environmentally and politically complex.

According to data presented by IATA during the IATA Global Media Day, their annual end-of-the-year press briefing, airlines are expected to achieve aggregate profits of USD 36.6 billion in 2025, with a margin of 3.6%. This overtakes the USD 31.5 billion profits projected for 2024, a margin of 3.3%.

Profits per passenger are estimated at USD 7 — 60 cents more than in 2024 but less than record aggregate profits per passenger of 2023. Marie Owens Thomsen, IATA’s Senior Vice President for Sustainability and Chief Economist, put context to this figure by noting that with that amount, one can only come around to buying a latte in Geneva, the host city for Media Day.

Revenue to hit new highs in 2025

For the first time in commercial aviation’s history, revenue will surpass USD 1 trillion in 2025, 4% more than in 2024. Expenses will also grow by 4%, reaching USD 940 billion the following year.

Passenger traffic is projected to grow by 6.7% compared to 2024. In 2025, 5.2 billion people are expected to travel by plane, breaking the 5 billion mark for the first time. Meanwhile, cargo is expected to grow by 5.8%, reaching 72.5 million tonnes.

The financial performance of the commercial aviation industry will be supported by lower fuel costs, with the gap between jet fuel and Brent crude oil prices narrowing to just 15 US Dollars, down from peaks of USD 60 in 2022. The situation could get even better if manufacturers resolve issues in production chains.

Willie Walsh, IATA’s Director General, was emphatic on this point, stating that the industry is dealing with a “quasi-monopoly” of manufacturers who are taking advantage of the situation, perhaps even profiting from the problems that are their own making. He pointed out how the price of some spare parts has far exceeded inflation. He said,

There is no evidence that these issues are being resolved, and we’ve had enough.

He added, on behalf of member airlines,

We need to increase pressure and seek support to enforce commitments. If I were running an airline, my patience would have run out long ago.

In this scenario, airlines in Asia and the Middle East will contribute the most to the growth of passengers.

However, the most significant profits will come from North America and Europe, the mature markets.

In 2024, Asia Pacific will be the largest Revenue Passenger Kilometres (RPK) market, and China will account for over 40% of the region’s traffic.

In 2024, RPKs grew by 18.6%, fueled partly by market stimulus from visa requirement relaxations for entry to several countries, including China, Vietnam, Malaysia, and Thailand. Chinese carriers reported net losses in the first half of 2024 due to supply chain issues, over-supply in the domestic market, and a limitation of 100 weekly frequencies from China to the US (lower than pre-pandemic). Asia-Pacific has also experienced the sharpest drop in yields in 2024. Thanks to strong demand and increasing load factors, a slight improvement in profitability is likely in 2025.

Hence, on an overall basis, this large market will only make profits of USD 3.2 billion, with a margin of 3.9%. For 2025, profits are expected to grow to USD 3.6 billion. Demand (in RPK) would grow by 11.7% in 2025, basically mellowing down from 2024, where growth was projected at 18.6%. Capacity (in ASK) would increase by 10.8%.

IATA notes that devaluations in countries with significant domestic operations (such as India) have posed challenges, as many key costs, such as fleet and debt services, are paid in US Dollars.

Bottomline

As you will note, on an aggregate basis, in 2025, airlines worldwide are expected to make 7 dollars per passenger transported. On a net profit level, IATA projects a profit of 36.6 Billion dollars in 2025. Globally, the passenger revenue, for the first time, will surpass a trillion dollars. Most of the profits will come from the mature markets in North America and Europe.

What do you make of the profit projections for airlines for 2025?

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