Ongoing geopolitical and economic uncertainties have brought significant unpredictability to global markets, including commercial aviation. But according to the International Air Transport Association (IATA), 2025 will nonetheless be a slightly better year for airlines than in 2024, albeit a touch below IATA’s previous predictions.
“The biggest positive driver is the price of jet fuel which has fallen 13% compared with 2024 and 1% below previous estimates,” IATA Director General Willie Walsh said at the IATA annual general meeting (AGM) in New Delhi, India.
“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 for airlines, he said, is an improvement of net margins from 3.4% in 2024 to 3.7% in 2025. “That’s still about half the average profitability across all industries. But considering the headwinds, it’s a strong result that demonstrates the resilience that airlines have worked hard to fortify.”
In 2025, total traveler numbers are expected to reach a record high 4.99 billion, representing a 4% increase on 2024, but below the previously projected 5.22 billion.
Delivering an update at the 81st IATA AGM in New Delhi, Director General Willie Walsh said he’s pleased to report that the air transport industry remains strong and relevant. Image: IATA
Other highlights from the expected 2025 financial performance see net profits rising to $36 billion from the $32.4 billion earned in 2024, but slightly down on the previously projected $36.6 billion; and total revenues reaching a record high of $979 billion, a 1.3% increase on 2024, but below the $1 trillion previously projected by IATA.
Air cargo volumes are expected to inch up by 0.6% year-over-year to 69 million tonnes, which is below the prior projection of 72.5 million tonnes.
“Perspective is critical to put into context such large industry-wide aggregate figures,” said Walsh. “Earning a $36 billion profit is significant. But that equates to just $7.20 per passenger per segment. It’s still a thin buffer and any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry’s resilience to the test. Policymakers who rely on airlines as the core of a value chain that employs 86.5 million people and supports 3.9% of global economic activity, must keep this clearly in focus.”
Even as the price of jet fuel has fallen, the high cost of Sustainable Aviation Fuel (SAF) remains a continued pain point for airlines. Most SAF is now heading toward Europe, where the EU and UK mandates for a 2% SAF blend kicked in on 1 January 2025, noted IATA. And those blend requirements will rise in the coming years.
But the cost of SAF for airlines has now doubled in Europe, said the association, because of compliance fees that SAF producers or suppliers are charging.
For the expected one million tonnes of SAF that will be purchased to meet the European mandates in 2025, the expected cost at current market prices is $1.2 billion.
Compliance fees are estimated to add an additional $1.7 billion on top of market prices — an amount that could have abated an additional 3.5 million tonnes of carbon emissions.
Instead of promoting the use of SAF, Europe’s SAF mandates have made SAF five times more costly than conventional jet fuel.
“This highlights the problem with the implementation of mandates before there are sufficient market conditions and before safeguards are in place against unreasonable market practices that raise the cost of decarbonization,” said Walsh.
“Raising the cost of the energy transition that is already estimated to be a staggering $4.7 trillion should not be the aim or the result of decarbonization policies. Europe needs to realize that its approach is not working and find another way.”
To support the development of a global SAF market, IATA has worked on two initiatives: a SAF registry managed by the Civil Aviation Decarbonization Organization (CADO) that brings a transparent and standardized system for tracking SAF purchases, usage and associated emissions reductions in compliance with international regulations such as global offsetting scheme CORSIA and the EU Emissions Trading Scheme; and the so-called SAF Matchmaker program that will facilitate SAF procurement by matching airline requests for SAF with supply offers.
But IATA is calling for “urgent action” by governments to create more effective polities, develop a comprehensive approach to energy policy that includes SAF; and ensure the success of CORSIA “as the sole market-based mechanism” to address international aviation’s CO2 emissions.
“Good intentions will not get us to net zero,” warned Walsh in New Delhi. “Action is what we need. Fortunately, it’s not too late to pick up pace and re-align us on the path to success.”
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Featured image credited to Jason Rabinowitz
