Airlines around the world are forecast to bring in over a trillion dollars in 2025, according to the latest data from the International Air Transport Association (IATA). If so, it will be the first time carriers have broken through the trillion mark – representing 1% of the global economy.
Net profits are expected to go up to $36.6 billion in 2025 making carriers a 3.6% net profit margin – a slight improvement from 2024’s 3.3% net profit margin. Average net profit per passenger is expected to be $0.9 down on 2023 but, at $7.0, still an improvement of $0.6 year-on-year. What’s more, operating profit in 2025 is predicted to be $67.5 billion, for a net operating margin of 6.7% (improved from 6.4% expected in 2024).
Lower oil prices to help compensate for other challenges
Lower oil prices are likely to contribute significantly to the positive outlook, to some extent making up for uncertainties around Trump, tariffs and trade wars and global conflicts. In addition, the increase in profits is predicted despite chronic plane manufacturing issues since the Covid-19 pandemic that have left airlines without the extra capacity and new routes they have been planning. Some airlines have even had to cancel entire routes in order to improve their ability to serve other schedules – a situation Willie Walsh, IATA’s Director General, said back in 2023 he was “beyond frustrated” about.
Notwithstanding the forecast increase in profits, those supply issues remain “unacceptable” in Walsh’s words. After meeting with manufacturers last year the situation has not improved and he told press this week “our patience has run out” with manufacturers behaving like “quasi-monopolies” and benefitting from issues they themselves have created.
Just $7 per passenger between profit and loss
Walsh’s words might seem churlish in the face of a trillion dollars in predicted revenue, but, while it is a huge amount of money, the IATA was quick to point out “that airlines carry $940 billion in costs, not to mention interest and taxes. They retain a net profit margin of just 3.6%. Put another way, the buffer between profit and loss, even in the good year that we are expecting of 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.
Strengthened profitability for #airlines is expected in 2025 despite ongoing supply chain issues, according to IATA's financial outlook for the global ✈️ industry.
— IATA (@IATA) December 10, 2024
Details: https://t.co/yDuVM6F3Kl#IATAGMD pic.twitter.com/lJD2kI7zlH
77% of flyers believe aviation is taking green transition seriously
Some of those costs are being invested in the so-called “green transition” but environmental campaign group Transport and Environment has pointed out that even more efficient planes will pollute more if there are more of them in the sky.
For now, IATA’s research shows that the aviation sector seems to be winning the argument. 90% of 6,500 respondents across 14 countries agree that air connectivity is critical to the economy. 88% believe that air travel “has a positive impact on societies” and 77% agree that “aviation leaders are taking the climate challenge seriously.” It should be noted that those surveyed were people who had taken at least one flight in the last year – so they could be argued to have a vested interest in their confidence in and positivity about the sector.
