The global airline industry is expected to see a “slight” rise in profit in 2025 despite “ongoing cost and supply chain challenges”, according to industry association IATA.
IATA’s latest forecast predicts a net profit for the airline industry of $36.6 billion next year, which compares to an expected profit of $31.5 billion in 2024. Despite this projected increase in profitability in 2025, it still only represents a profit margin of 3.6 per cent (up from a margin of 3.3 per cent this year).
Average net profit per passenger is forecast to be $7 in 2025, which would be an improvement on 2024’s expected profit of $6.4 per passenger but still down on 2023’s figure of $7.9 per passenger.
The association also forecasts that airline passenger numbers will increase by 6.7 per cent year-on-year to reach 5.2 billion in 2025, which would be the first time that global air traffic has exceeded the five billion milestone in a year. The total number of flights is also predicted to reach 40 million next year.
Willie Walsh, IATA’s director general, said airline profits in 2025 will be “hard-earned”, as they take advantage of lower oil prices, as well as maintaining higher load factors (above 83 per cent) and “tightly controlling” costs.
“All these efforts will help to mitigate several drags on profitability which are outside of airlines’ control: namely persistent supply chain challenges, infrastructure deficiencies, onerous regulation and a rising tax burden,” added Walsh.
“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.”
European airlines are expected to make a net profit of $10 billion in 2024 with a net margin of 3.9 per cent and a profit per passenger of $8.20. Net profit is forecast to rise to $11.9 billion in 2025, with a margin of 4.4 per cent and a per passenger profit of $9.20.
“Europe faced numerous challenges impacting competitiveness in 2024, including rising wages, fleet groundings, noise-related flight restrictions, increasing airport charges, onerous regulations and high national taxes,” said IATA in its report.
“The ongoing war in Ukraine continues to affect the continent’s carriers with 20 per cent of its airspace closed, resulting in longer routes to some Asia destinations as Russian airspace remains off-limits to European carriers.
“Nonetheless, 2025 is expected to see a slight upturn in profitability largely driven by the LCC (low-cost carrier) sector as it turns its back on the 2024 peak in fleet groundings due to supply chain issues.”