The airline industry's financial outlook for 2025 remains positive, with growth expected in net profits and total revenue, but the totals projected for each have been slightly reduced, the International Air Transport Association announced Monday at its annual general meeting in New Delhi.
Net profits for 2025 are projected to reach $36 billion, up from the $32.4 billion estimated in 2024, but down from its December 2024 outlook of $36.6 billion. IATA also previously projected total airline revenue to exceed $1 trillion for the first time, but it has tempered that expectation to $979 billion. Still, that represents a 1.3 percent year over year revenue increase.
Passenger revenue for 2025 is projected to reach $693 billion, an increase of 1.6 percent year over year, and what would be an all-time high, according to IATA. The figure is "bolstered by an additional $144 billion in ancillary revenue."
Passenger growth, as measured in revenue passenger kilometers, is expected to increase 5.8 percent year over year, "a significant normalization after the exceptional double-digit growth of the pandemic recovery."
IATA also lowered its outlook for total 2025 expenses to $913 million, up 1 percent year over year, but below the $940 million projected in December.
"The first half of 2025 has brought significant uncertainties to global markets," IATA director general Willie Walsh said in a statement. "Nonetheless, by many measures including net profits, it will still be a better year for airlines than 2024, although slightly below our previous projections. The biggest positive driver is the price of jet fuel which has fallen 13 percent compared with 2024 and 1 percent below previous estimates."
In an April 2025 poll with 6,500 respondents from 14 countries, IATA found that 68 percent of business traveler respondents (which accounted for 50 percent of all those polled) expected increased business travel amid trade tensions to visit customers. About 65 percent of business travelers said trade tensions would have no impact on their individual travel habits, aside from any volume changes that might occur.
Industry Risks
IATA cited four key risks to the airline industry amid ongoing geopolitical and economic uncertainties.
Conflict: Ongoing or expanded military activity related to international conflicts could have a "dampening effect" on the industry. However, resolution of current conflicts, would have a benefit for airlines in "reconnecting de-linked economies and reopening airspace."
Trade tensions: Tariffs and prolonged trade wars negative affect demand for air cargo "and potentially travel," according to IATA. Additionally, "the uncertainty over how the Trump administration's trade policies will evolve could hold back critical decisions that drive economic activity, and with it the demand for air cargo and business travel."
Fragmentation: IATA warned that the fragmentation of global standards or the weakening of multilateral institutions and agreements could increase airline costs with "a more complex or unstable regulatory environment," including evolving policies on climate, trade and facilitation, among other factors.
Oil prices: The myriad factors that affect oil prices could produce shifts in pricing volatility with "significant impact on airline financial prospects." Some of these factors include economic growth projections, the amount of extraction activity undertaken, policies on decarbonization, sanctions, the availability of refining capacity and transport blockages, according to IATA.
Regional Outlook
North America is projected to generate the "highest absolute profit" in 2025 even as it is expected to be affected by a slowdown in the U.S. economy, "with increased tariffs likely to erode both consumer and business sentiment." IATA projects the region's net profit to reach $12.7 billion, up from $11.5 billion estimated for 2024, with air demand increasing 0.4 percent year over year, and capacity increasing 1.3 percent. In addition, "the persistent shortage of pilots and engine reliability problems, particularly in the low-cost sector, will limit growth in the region."
Europe is projected to report $11.3 billion in 2025 net profit, up from $9.6 billion estimated for 2024. Air demand is expected to increase 6 percent year over year with capacity also projected to increase 5.9 percent. The region is expected to have "strong passenger demand, driven by growth in the low-cost sector." More aircraft will return to flying after engine-related groundings, and the "EU's open skies agreements with North Africa will provide market opportunities."
Asia-Pacific is the region with the largest demand, and with China accounting for more than 40 percent of the area's traffic, according to IATA. 2025 net profit is projected to be $4.9 billion, an increase from the $4 billion estimated in 2024, with demand expected to be up 9 percent year over year and capacity up 6.9 percent. Passenger demand will be boosted by the relaxation in visa requirements in several Asian countries, however the gross domestic forecast for the region, particularly China, has been revised down, according to IATA.
IATA projects Latin America's 2025 net profit to be $1.1 billion, down from the $1.3 billion estimated for 2024—the only region with an expected net profit decline, according to IATA. Still, demand is projected to increase 5.8 percent year over year with capacity up 7.8 percent. The region's airlines "continue to be impacted by weak domestic currencies as major cost items, such as fleet expenses and debt servicing, are paid in U.S. dollars." Further, the proposed 26.5 percent VAT on tickets in Brazil "could have a significant impact on the market."
Air travel demand in the Middle East, for each business and leisure travel, is expected to be "strong," supported by "robust economic performance," according to IATA, which projects the region's 2025 net profit to be $6.2 billion, up from an estimated $6.1 billion a year prior. There could be limitation in capacity, however, with delays in aircraft delivery.
2025 net profit for Africa is projected to be $200 million, level with estimates for 2024, with demand expected to increase 8 percent year over year and capacity up 7.3 percent. The region's carriers "face high operational costs and a low propensity for air travel expenditure in many of their home markets," according to IATA. Despite some challenges, "there. Is sustained demand for air travel in Africa."