Airlines to Make $1 trillion for the First Time in History

By Evans Momodu
5 minute read


The global airline industry is set to achieve a record-breaking $1 trillion in revenue next year, with passenger numbers projected to reach an all-time high of 5 billion, according to the International Air Transport Association (IATA).

This represents a robust recovery for a sector that suffered $187 billion in losses during the pandemic years of 2020 to 2022.

IATA estimates that airlines’ average profit per passenger will climb to $7 in 2025, up from $6.40 this year and a mere $2.25 just 18 months ago. Despite this improvement, industry-wide net profitability remains slim at $36.6 billion, reflecting ongoing cost pressures.

Middle Eastern carriers are forecast to lead profitability, earning $24 per passenger, followed by U.S. airlines at $12 and European airlines at $9. Airlines in Africa, Latin America, and the Asia-Pacific are expected to fall below the industry average.

Challenges Impacting the Sector

• Aircraft Delivery Delays: Supply chain issues with manufacturers such as Airbus and Boeing are forcing airlines to extend the use of older, less fuel-efficient aircraft, raising operational costs and environmental concerns.
• Airspace Restrictions: Ongoing global conflicts have closed large areas of airspace, compelling airlines to take longer routes, which increase fuel consumption, delays, and overall costs.

Environmental and Policy Implications

The industry’s pledge to achieve net-zero carbon emissions by 2050 faces potential setbacks due to political changes in the U.S. A shift away from current policies, such as tax incentives for sustainable aviation fuel under the Inflation Reduction Act, could hinder progress toward reducing the sector’s 2.5% contribution to global carbon emissions.

In a sign of continued growth, Alaska Air Group announced plans to begin flights from Seattle to Tokyo and Seoul next year, leveraging its acquisition of Hawaiian Airlines’ parent company. The group aims to generate $1 billion in additional profit from the combined operations by 2027.

Conclusion

While the airline industry’s revenue and profitability have rebounded strongly, challenges such as supply chain disruptions, geopolitical tensions, and environmental commitments underscore the fragility of this recovery.

The industry is navigating a delicate balance between capitalising on surging demand and addressing long-term sustainability and operational hurdles.
Source: CNN 
Image: ABC