Airline profit will increase despite head winds of geopolitics and trade wars

Despite uncertainties created by geopolitical strife and tariff wars, airlines are expected to see a thin increase of profit to $ 36 billion in 2025 as compared to $32.4 billion last year due to lower fuel price, airline lobby group International Air Transport Association (IATA) said on Monday at the Annual General meeting in New Delhi.


The projection is slightly lower than the previous forecast of $36.6 billion in December.


"Considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify,” Willie Walsh, IATA’s Director General said. IATA counts over 300 airlines as its members.

The biggest positive driver is the price of jet fuel which has fallen 13% compared with 2024 and 1% below previous estimates.

“Moreover, we anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence. The result is an improvement of net margins from 3.4% in 2024 to 3.7% in 2025,” Walsh said.

However Walsh warned that segment. It’s still a thin margin and any new tax, increase in airport or navigation charge, demand shock or costly regulation may reverse the situation of industry quickly and put the industry’s resilience to the test.

Industry leaders warned that geopolitical unrest which leads to airspace closure severely hampers financial viability.


“As conflict zones proliferate, we highlighted to the UN Security Council the responsibility of governments to ensure that civil aviation is never the target of military operations, even inadvertently. The most effective way to do that is by sharing information,” Walsh said.

Delay in aircraft delivery have hampered airlines' ability to meet soaring travel demand in certain regions, while driving up operating costs as carriers are forced to keep older jets in service or pay more for the dwindling number of available spare parts.

Passenger numbers are expected to hit a record $4.99 billion in 2025, reflecting a 4% year-on-year rise with an increase of occupancy to 84%. Passenger revenues will increase to $693 billion, supported by a 6.7% growth in ancillary revenue. Real average return airfare is projected to drop to $374, around 40% lower than in 2014, due to lower fuel prices and intense competition.