What’s ahead for airlines?

This week IATA, the International Air Transport Association, released its 2025 outlook, covering everything from the number of people expected to fly, to financial outlooks for the industry and the progress (or not…) on the industry’s goal of producing enough sustainable aviation fuel (SAF) to help airlines combat climate change.

Here are some highlights:

5.2 billion people are expected to take to the skies during 2025. That’s a 6.7% increase over 2024 and the first time the total expected passengers will exceed the 5 billion mark.

IATA expects the average airfare in 2025 to be $380, which is 1.8% lower than 2024.

In 2025, global airline industry revenues will exceed $1 trillion for the first time, representing almost 1% of the global economy. Airlines also have $940 billion in costs and retain a net profit margin of just 3.6%, said Willie Walsh, IATA’s Director General, “Put another way, the buffer between profit and loss, even in the good year that we are expecting of 2025, is just $7 per passenger.”

Airlines face some significant risks

IATA notes that there are strong geopolitical and economic uncertainties facing the airline industry, including multiple conflicts around the world and the incoming Trump Administration, which could create tariffs and trade wars that dampen both air cargo demand and business travel.

Is there a path to Net Zero?

In 2021, the global airline industry committed to achieving net-zero carbon emissions from their operations by 2050.

Offsets and carbon capture as well as new technologies such as electric and hydrogen are elements of the plan, but the production of enough sustainable aviation fuel (SAF) is the major component.

Unfortunately, while the amount of sustainable aviation fuel being produced is increasing, it’s going slower than planned.

“Governments are sending mixed signals to oil companies which continue to receive subsidies for their exploration and production of fossil oil and gas,” said IATA’s Willia Walsh, “And investors in new generation fuel producers seem to be waiting for guarantees of easy money before going full throttle.”

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