The International Air Transport Association (IATA) has forecast that the airline industry’s profit margin will improve to 3.9% in 2026. The outlook was presented at the IATA Global Media Day (IATAGMD), which is being held in Geneva, Switzerland.
Total revenue in 2026 is expected to grow to USD 1.053 trillion (up 4.5% compared to 2025). Operating profit is projected at USD 72.8 billion, with net profit at USD 41.0 billion. IATA expects global GDP growth to be broadly stable at 3.1%, inflation to ease slightly, and global trade growth to remain weak at 0.5%.
Profit per passenger is forecast at USD 7.9, which IATA views as a solid figure on par with the previous year despite supply chain issues, geopolitical tensions, and a stagnation in global trade. Willie Walsh, IATA’s Director General, pointed out that “as an industry, we are still not consistently generating returns above our cost of capital. You can make more money selling iPhone covers.” In the past, such comparisons were often made using the price of a cup of coffee.
The number of passengers carried is expected to reach 5.2 billion (up 4.4% year-on-year). Passenger revenue is forecast at USD 751 billion, with ancillary revenues projected at USD 145 billion. Yields are expected to be almost flat, while the average load factor is projected to hit a record high of 83.8%.
On the cost side, fuel expenses are projected to fall to USD 252 billion. IATA expects crude oil prices to average USD 62 per barrel (down 11% year-on-year) and jet fuel prices to average USD 88 (down 2.4%). As high-cost fuel hedges expire, airlines are expected to secure fuel at average prices closer to spot levels. With the average fleet age rising above 15 years to a record high, fuel efficiency improvements will be limited to about 1%. The additional cost of purchasing Sustainable Aviation Fuel (SAF) is estimated at USD 4.5 billion, with supply projected at 2.4 million tonnes, equivalent to about 0.8% of total fuel use.
Non-fuel costs are estimated at USD 729 billion (up 5.8% year-on-year), with labor costs rising faster than inflation. Productivity per employee is struggling to recover to 2019 levels, and the pace of workforce expansion is outstripping improvements in productivity. Maintenance costs are also increasing due to the aging of aircraft and ongoing disruptions in supply chains.
Due to a weaker U.S. dollar, airlines that have high U.S. dollar–denominated costs but relatively low U.S. dollar–denominated revenues are expected to see a boost in profitability. IATA estimates that a 1% depreciation of the U.S. dollar could improve global airlines’ bottom-line profits by around 1%.
In the Asia-Pacific region, net profit is forecast at USD 6.6 billion, with a net profit margin of 2.3% and profit per passenger of USD 3.2. Passenger demand remains robust, supported by expansion in China and India, a recovery in tourism activity, and the growth of the middle class. The recovery of international routes is relatively slow, and continued excess capacity is expected to put downward pressure on yields. The average load factor is projected to reach a record high of 84.4%. (Reporting cooperation: IATA)
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