Planned production of alternative aviation fuels “faltered” in 2025, with airlines facing higher prices and lower-than-expected levels of supply, according to IATA director general Willie Walsh.
Walsh, speaking at the Changi Aviation Summit in Singapore this week, said “sufficient progress” was not being made in producing what the sector calls “sustainable” aviation fuel (SAF).
“SAF output reached 1.9 million tonnes in 2025, representing just 0.6 per cent of total jet fuel consumption, and this is a downward revision from our earlier estimates,” explained Walsh.
“Unfortunately, planned production has faltered. Mandates have pushed prices higher, which have just discouraged voluntary demand and reduced output. SAF prices exceed fossil-based jet prices by a factor of more than two, while the evidence shows that in markets with mandates, that factor can increase to four times.”
Both the EU and the UK introduced SAF mandates in 2025 requiring the aviation industry to use at least 2 per cent alternative aviation fuels, with that percentage due to rise in the coming years.
Walsh also highlighted the airline sector’s growth last year, with global passenger traffic up by 5.3 per cent year-on-year, as measured by revenue passenger kilometres (RPKs), which was driven mainly by a 7.1 per cent rise in international traffic.
IATA is predicting a further 4.9 per cent year-on-year increase in global airline traffic during 2026, with the Asia-Pacific region set to see the highest level of growth this year at 7.3 per cent.
Although, Walsh added that profitability “still represents a major challenge for our industry”. He said the airline sector’s overall net profit would be just under $40 billion in 2025, which equated to a net margin of 3.9 per cent. IATA is forecasting that the industry’s net profit is only set to rise to around $41 billion this year.
“For context, the best year the airline industry ever saw in terms of profitability was in 2015 when we delivered an operating margin of 8.3 per cent and a net margin of 5 per cent,” said Walsh.
“This will continue to be a significant challenge for our industry as we go through 2026. Net profit per passenger in 2025 and in 2026 is a meagre $7.90 per passenger.”