2025 Record Profitability,
Now What? Nov/Dec 2025

It looks as if passenger numbers increased in 2025 by 4.3% to a record 5bn. There was a modest growth in the length of haul — back to the peak of 1,900km last seen in 2019 — and passenger demand in revenue passenger kilometres showed a higher increase of 5.2%, marginally above the rate of growth in seat capacity, and a figure broadly consistent with the long-term historical annual average. Load factors possibly reached an all-time high of 83.7% — in August 2025 IATA reported the highest monthly load factor on record of 86%.

On a regional basis IATA estimates for 2025:

• Asia/Pacific provided the highest rate of growth of 8% in passenger demand. China particularly was late in opening its borders in the post-pandemic recovery, but this rate of growth suggests a return to normality. China and India lead the regional expansion, but restrictions on flights, and trade tensions between China and the USA continue to limit market access. IATA estimates an operating profit for 2025 of $12.6bn (a 4.7% margin), and net profits of $6.2bn — a modest $3.30 per passenger.
• Latin America recorded a 7.1% growth in RPK. There have been mixed financial performances in the region as various carriers have entered and exited Chapter 11 restructuring to wipe out pandemic era debts. Benefiting from US dollar weakness through the year, It estimates the region generated operating profits of a record $6.2bn (an extraordinary 14% margin) and net profits of $2.5bn — $7.30 per passenger.
• Middle East carriers are estimated to have seen a 6% growth in passenger demand, and another year of unusual profits: $9.4bn at the operating level (a 13% margin) and $6.6bn net ($28.90 per passenger). This shows a dramatic change in the region’s performance compared with the status pre-pandemic. At that time, the Superconnectors were in full competitive mode and Etihad was still irrationally chasing market share: in 2019 the region generated $(1.5)bn in net losses, equivalent to paying $7.90 to each passenger to get them to fly.
• Europe settled down to a 5% growth in demand and capacity, with a slight dip in load factors to 84.7% that was slightly short of the 2019 peak of 85.2%. The region is expected to have produced the highest nominal level of net profits, overtaking North America for once, at $13.2bn (a 4.8% margin, and equivalent to $10.60 per passenger). Operating profits are expected to come in at $18.7bn (a margin of 6.8%). The organisation points out that the LCCs are performing particularly well, growing at double-digit rates and outperforming FSCs on net profit margin. With a luke-warm economic environment, headwinds from the SAF mandates, and a saturated airspace controlled by perennially striking personnel, traffic growth for the region’s airlines is expected to moderate in 2026 to 3.8%. But it could well maintain its position as the most profitable region with operating profits of $19.9bn (6.9% margin) and $14bn net.
• North America had a difficult year, particularly in the USA. Passenger demand stagnated with full year RPK growth of 0.2% and a drop in load factors of one percentage point to 83.4%: the US domestic — 60% of the total — market contracted. A series of headwinds weighed on demand: policy uncertainty around tariffs, and tighter immigration rules dampened both inbound and domestic travel. The situation worsened with the longest government shutdown in history, which amplified air traffic controller shortages. Demand on cross-border routes over the 49^th parallel was particularly affected by the political spat between the USA and Canada. LCCs in the US have been weak, heavily exposed to the widening wealth inequality between the “haves” and the “have-nots” amid the backdrop of weak consumer confidence and the very successful use of unbundled “basic” fares by the network carriers. Their reliance on single-type fleets, IATA suggests, has proven inflexible amid supply chain disruptions. Nevertheless this increasingly consolidated market possibly generated $19.2bn of operating profits (5.9% margin) and net profits of $10.8bn (a margin of 3.3%, and equivalent to $9.50 per passenger). The trade organisation is suggesting a modest uptick in growth for 2026 — to 1.5% — operating profits of $20.5bn and net profits of $11.3bn (still only a 3% margin).
• Africa, as the smallest region, tends to get ignored. But it too saw a 7.4% growth in passenger demand in 2025 and, remarkably an operating profit margin of 3.5% giving profits of $0.6bn. For most of the decade leading up to 2019, the region had generated negative margins at the operating level. Net profits are expected of $0.2bn, or $1.40 per passenger. IATA expects further demand growth of 6% in 2026 and stable profit margins, but points out that African carriers suffer the highest unit costs in the world, almost double the world average: aircraft are five years older on average than the global norm boosting maintenance costs and limiting utilisation; lack of supplier competition provides some of the highest in plane fuel costs in the world (into the older planes that burn more fuel). It expects the region will continue to operate on extremely thin margins.

Source: IATA

Constraints on growth

IATA points to several areas that are likely to continue to act as a restriction on growth for the global airline industry. A major factor since the pandemic has been a shortage of aircraft and engine deliveries. On top of the particular problems faced by Boeing over its 737 and 787 programmes, all the OEMs have had to face supply chain difficulties. This has then been exacerbated by the engine problems at Pratt and Whitney, and congestion at MRO facilities.

Aircraft have been kept in passenger service longer and worked harder. The average age of the world’s aircraft fleet is rising and in 2025 reached over 15 years old. The average age of widebody equipment in passenger service touched 14.5 years compared with under 12 years old in 2019. IATA points out that fuel efficiency, which historically had improved by 2-2.5% a year, stagnated in 2025 and is only 1.% better than it had been in 2019 — and the increasing use of new generation aircraft and continuing fuel efficiency progress is an important part of the industry’s plan to achieve Net Zero emissions by 2025.

Airlines want new aircraft, but have not been able to get them, so the industry aircraft backlog has risen to a record of over 17,000 aircraft — equivalent to nearly 60% of the active fleet (see chart) and over ten years of production. The problem is not going to go away soon.

Further, labour shortages are growing — particularly as pilots and maintenance engineers approach retirement. In the US the median age of active commercial pilots, 45-49 in 2019, had risen to 50-54 in 2024. Those approaching mandatory retirement (aged 60-64) accounted for 13% of the cohort up from 6% in 2019 — despite covid related early retirements. Boeing estimates that over the next 20 years there is a global need for 600,000 new pilots, 700,000 engineers and 1m cabin crew. This is not an area that can be replaced by artificial intelligence.

The result has been wage pressure — particularly seen in the US and Europe — which has pushed staff costs to become the highest proportion of operating costs (28% in 2025, five points higher than in 2019).

IATA also points to a slow down in the perceived relationship between real growth in World GDP and the rate of growth in revenue passenger kilometres (see chart). This historically may have been treated by some as a causal relationship — for a 1% growth in GDP you get a 2-2.5% growth in traffic — but in reality it is more likely a reflection of the complex interplay between the passengers’ incomes, propensity to travel, and sensitivity to the cost of travel (and particularly the total trip cost).

Cost pressures are intensifying — and especially the costs of emission compliance in the quest for net zero. CORSIA costs are forecast to reach $1.7bn in 2026, while IATA expects blended SAF prices of $2,490 per tonne (nearly four times the price of jet fuel elevated partly by the EU and UK mandates). As fundamental operating costs rise, it may be impossible for the industry to maintain the historic real 2% annual decline in fares.