Airline Industry Outlook for 2025: Key Projections From IATA

Latin America’s airline industry is showing signs of improvement, despite challenges such as economic instability, currency depreciation, and ongoing supply chain disruptions. According to the International Air Transport Association (IATA), 2025 is expected to bring modest growth in profits and demand, as airlines globally adapt to various pressures.

IATA's forecast for the airline industry in 2025 suggests a more favorable financial landscape with slight improvements in net profitability and operational efficiency compared to 2024. Global airlines are projected to earn US$36.6 billion in net profit, with a net profit margin of 3.6%, an improvement from US$31.5 billion in 2024. The average net profit per passenger is expected to rise to US$7.00, an increase from the forecasted US$6.40 in 2024, though it is lower than the 2023 peak of US$7.90.

Overall, the airline industry’s revenues in 2025 are forecast to surpass US$1 trillion for the first time, representing a 4.4% increase compared to the previous year. This is attributed to a combination of stronger passenger demand and higher cargo revenues. On the operational side, airlines are expected to generate US$67.5 billion in operating profit, achieving a margin of 6.7%, up from 6.4% in 2024.

Passenger traffic is projected to grow by 6.7%, reaching 5.2 billion passengers in 2025. This marks the first time that passenger volumes are expected to exceed the 5-billion threshold. Cargo volumes are also expected to increase by 5.8% to 72.5Mt. Despite these positive projections, airlines are still expected to face challenges such as high operating costs, including fuel prices and labor-related expenses.

Regional and Global Economic Factors Influencing Airline Performance

IATA’s global economic outlook emphasizes the airline industry will benefit from lower fuel prices and improved efficiency. However, ongoing challenges such as disruptions in supply chains and labor strikes may continue to constrain growth and inflate operating costs in specific areas like aircraft leasing and maintenance.

A significant factor affecting the airline industry's performance is the fluctuating price of aviation fuel. After the drop to US$70/b in September 2024, the average price of aviation fuel is expected to rise to US$87/b in 2025, contributing to a projected 4.8% decline in total fuel expenditure, despite an expected 6% increase in fuel consumption.

The industry is also facing pressures from labor costs. In 2025, total labor costs are projected to rise by 7.6%, amounting to US$253 billion. This is mainly driven by wage increases and labor shortages. However, with productivity gains, unit labor costs are expected to rise by only 0.5%.

In terms of regional performance, airlines in Europe, the Middle East, and Latin America are forecast to see improved returns on investment. For Latin America, net profits are expected to increase to US$1.3 billion, with a net margin of 2.4%, up from US$1 billion (2.1% margin) in 2024. The region’s growth is expected to be driven by the recovery of airlines emerging from financial restructuring, favorable exchange rate movements, and ongoing regional demand.

Global airline employment is expected to grow to 3.3 million jobs by 2025, with a total workforce of 86.5 million people involved in aviation-related sectors, contributing US$4.1 trillion to the global economy, or 3.9% of global GDP (2023 data). The industry’s significant contribution to global connectivity underscores its economic importance, facilitating trade, tourism, and business across nations.