Airlines expect to carry more passengers this year, but earn only half as much profit as last year, as high fuel prices do not appear to be fully deterring travel, according to projections published on Sunday.
The International Air Transport Association (IATA) predicted that its 370 member airlines, which account for 85 percent of global air traffic, would carry 5.1 billion passengers this year.
That is up 2.4 percent from last year, when passenger traffic was estimated to have reached 4.98 billion. The 4 billion mark was surpassed in 2023.
Photo: EPA
Asked about the impact of the conflict in the Middle East compared with the COVID-19 pandemic in 2020 and 2021, IATA director-general Willie Walsh replied: “I don’t see this as a crisis.”
“You’re looking at an industry that is forecasting growth,” he said. “If you extract the impact of the Middle East, we’re looking at growth of 3.5 percent.”
However, the growth would be accompanied by profitability only half as strong as last year, while Middle Eastern airlines are expected to post losses.
“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” Walsh said in a statement. “Profits will shrink from US$45 billion in 2025 to US$23 billion this year, and margins will shrink from 4.2 percent to 2.0 percent.
According to IATA calculations, net profit is expected to be US$4.50 per passenger, half last year’s figure.
With fuel costs rising — and those increases being passed on in part through higher ticket prices — the revenue of IATA airlines is expected to grow 9 percent this year, reaching US$1.165 trillion.
“Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines,” the IATA said.
Profitability would vary across different regions of the world, according to the organization’s projections.
Middle Eastern airlines, which have traditionally had access to an abundant supply of fuel, are expected to face a difficult year, with net margins projected to turn negative.
European airlines are expected to become the most profitable with a 3.1 percent net margin, followed by those in North America with 2.5 percent and Asia-Pacific with 2.1 percent, the IATA said.
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