The International Air Transport Association (IATA) has nearly halved its profit forecasts for airlines. This is primarily due to higher fuel prices, but also because the war in the Middle East has severely disrupted flights through aviation hubs such as Dubai.
Nevertheless, IATA estimates that this year the number of passengers will exceed 5 billion for the first time.
Net profit of $4,5 per passenger
IATA CEO Willie Walsh estimates profits at 23 billion euros, down from 45 billion euros in 2025. As a result, margins would also shrink from 4,2% to 2,0%. Net profit per passenger would amount to just $4.50, whereas a year earlier it was twice that.
“Given the circumstances, that points to resilience,” Walsh said. “But that wouldn’t even buy you a hot dog in most World Cup soccer stadiums, and it doesn’t leave much margin if other costs or taxes were to rise,” he added.
By partially passing on the higher kerosene prices, revenue would increase by 9%, to 1,165 billion euros.
Still, 5,1 billion passengers are expected
There are also significant differences between airlines. Middle Eastern airlines, which are typically the most profitable, are projected to post losses. In 2025, they still had a margin of 9,4%, the highest in the entire sector.
By 2026, the margin is projected to be -6,1%. As a result, European airlines are expected to become the most profitable, with a net margin of 3,1%, ahead of those in North America (2,5%) and the Asia-Pacific region (2,1%).
But another sign of the decline in air travel, for example, was the 0,6% year-over-year drop in domestic traffic in the United States, which accounts for 13,6% of global traffic, in April. Yet the US, the world’s leading producer of crude oil, does not rely on the Middle East for its jet fuel.
Many airlines have already raised ticket prices to offset some of their margin losses. At the same time, there has been a recent trend to encourage travelers to keep booking.
Air France-KLM, for example, has already announced a promotional campaign for travel from France, allowing people to rebook flights free of charge if necessary. A similar campaign is also expected in the Netherlands.
IATA, which represents 85% of the global industry, estimates, however, that 5,1 billion passengers will be transported this year. That is an increase of 2,4% compared to 2025.
Lack of interest from oil companies
Furthermore, IATA once again pointed out that the production of Sustainable Aviation Fuel (SAF) is barely getting off the ground worldwide. According to IATA, this also puts airlines’ targets for increasing SAF use at risk.
Global SAF production is expected to reach 2,4 million tons this year. That is equivalent to 0,8% of the sector’s fuel consumption.
“It looks like it will be another disappointing year for SAF production,” said Walsh. “The path to meeting 65% of our fuel needs by 2050 is becoming more difficult with each passing year due to poorly timed government policies and the obvious lack of interest from oil companies.”
Goals unrealistic
In addition to SAF, there is also e-SAF, which uses renewable electricity and green hydrogen. Europe has mandated that 0,6 million tons of e-SAF must be produced by 2030, so that 6% of aircraft fuel tanks are SAF, 20% by 2035, and 70% by 2050.
However, global operational or under-construction production capacity amounts to only 0,02 million tons, with just one production site in operation. According to IATA, the targets are therefore “unrealistic.”
Walsh believes that governments must take measures to create a viable SAF market. In his view, the urgency of this has increased due to the sharp rise in fuel prices resulting from the war in the Middle East.
