The global airline industry is anticipated to achieve a net income of $36.6 billion by 2025, driven by a record-breaking 5.2 billion passengers taking to the skies, as outlined in the annual forecast from the sector’s foremost advocacy organization.

This projection indicates a 16% rise compared to the figures from 2024. Profit margins within the industry are expected to reach 3.6%, up from the 3.3% margins predicted for 2024, according to a report released on Wednesday by the International Air Transport Association (IATA). The increase in profitability is linked to declining oil prices and heightened demand, although potential tariffs and trade disputes under the upcoming Trump administration may negatively influence the sector’s outlook, the organization acknowledged.

Furthermore, IATA estimates that industry revenues will exceed $1 trillion for the first time in 2025.

Despite a robust recovery in demand following the pandemic, the aviation industry continues to grapple with narrow profit margins. Airlines are confronting challenges stemming from supply chain disruptions, leading to delays in the delivery of new, more fuel-efficient aircraft and extended maintenance times for existing planes.

In 2024, North America maintained its position as the largest contributor to global industry profits, although margins were reduced compared to pre-pandemic levels due to sluggish aircraft deliveries and escalating costs, particularly among low-cost carriers, according to IATA. Meanwhile, the Middle East showcased the strongest financial results and was the sole region to experience an increase in passenger yields, fueled by strong demand for premium long-haul travel.

IATA warned that their projections could shift if the conflicts in Ukraine and the Middle East intensify, or if oil prices do not drop as anticipated.

© 2024 Bloomberg

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