“The first half of 2025 has brought significant uncertainties to global markets,” IATA Director General Willie Walsh said in the release. At the same time, the industry is benefiting from lower oil prices, which are in turn trimming airlines’ fuel bills — the biggest single expense for carriers.
Airlines particularly in the US have been forced to scale back their outlooks in recent weeks after price-sensitive passengers reconsidered their travel plans and some high-profile accidents discouraged bookings.
In March, Delta Air Lines slashed its first-quarter profit guidance and also reduced its outlook for revenue growth and operating margin. That was a sharp reversal from the start of the year, when it saw a steady demand environment.
Walsh said in an interview with Bloomberg Television that he remains optimistic, considering some of the events restraining growth are “short term in nature.” “It won’t have a long term impact on the growth in the industry,” Walsh said. “Demand for aviation, demand for flying will remain strong.”
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Last year, the industry earned a collective US$32.4 billion, on a margin of 3.4%. Walsh said profitability remains “wafer thin”, highlighting how easily airlines can see their targets dissolve because of economic headwinds and changing consumer sentiment.
The North American market is expected to see the highest total profit contribution at US$12.7 billion, followed by Europe. The Middle East, home to huge carriers like Emirates and Qatar Airways, will account for the highest profit per passenger, IATA said, though capacity there is being limited by aircraft delivery delays.
Airline executives have gathered in New Delhi this week for IATA’s annual general meeting to discuss the state of the sector. India has become a key market for future growth as a rising middle class takes up flying, putting the country of over 1.4 billion people on the move.
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That’s drawing more global airlines to the region, with Delta CEO Ed Bastian calling a code-sharing agreement announced on the eve of the AGM with local discount specialist IndiGo “the next step of our growth strategy”.
Bastian said in a separate interview with Bloomberg TV that he expects the latter part of the year to show improved demand, after what he said was a “choppy” start to 2025 amid trade tensions and hesitancy, especially among leisure travellers in the US to book flights.
