IATA Flags Currency Pressure Pushing Airline Costs Higher

The depreciation of local currencies against the US dollar has become a key factor shaping airline cost structures, according to new analysis from the International Air Transport Association (IATA). The organization noted that jet fuel purchases are “almost always paid in dollars,” making currency movements a direct operational concern for carriers across multiple regions.

IATA highlighted that the divergence between fuel price declines and operating costs has been evident for a decade. The group reported that the volatility of jet fuel prices in dollars “has intensified since 2020,” driven by the pandemic-related collapse in demand, supply-chain disruptions during the recovery, and ongoing geopolitical tensions.

The most pronounced impacts are being felt in Russia and Brazil. IATA attributed Russia’s exposure to the weakening ruble following the invasion of Ukraine and to sanctions that “have limited the price of Russian oil since 2022.” Brazil, meanwhile, has faced currency pressure as markets anticipate monetary easing while the country continues to manage “persistent fiscal issues and the negative impact of tariffs on the balance of payments.”

IATA added that the European Union, China and India have also seen depreciation against the dollar since mid-2022, albeit to a lesser extent. It noted that the dollar has fallen “about 10% against many currencies this year,” helping reduce fuel bills for carriers whose domestic currencies strengthened during that period.

Fuel accounts for about 26% of airline operating costs. IATA stated that 55%–60% of global airline costs are denominated in dollars, compared with only 50%–55% of revenues. This imbalance means currency appreciation or depreciation has a direct impact on margins. According to the association, a 1% appreciation of the dollar against other currencies can reduce operating margins by “about 0.1 percentage points,” while a 1% depreciation can improve margins by a similar amount.

IATA’s August 2025 data shows the average jet fuel barrel at “about US$86 this year, compared with US$99 in 2024,”  yielding “an estimated US$25 billion in global savings.” The association linked the drop to the dollar’s depreciation in several markets and a modest increase in SAF output, which currently represents “0.7% of total consumption” and is expected to “double its share in 2025.”

IATA noted that some airlines have “cut their losses by half in the first quarter,” helped by lower fuel costs and stable demand. Analysts cautioned, however, that the outlook remains sensitive to conflicts, supply-chain constraints, rising labor and maintenance costs, and delays in fleet renewal that could heighten exposure to future energy price swings.

Latin America faces a significant challenge in aviation decarbonization because the region does not produce sustainable aviation fuel and has no active development projects. The Latin American and Caribbean Air Transport Association stated that the transition to SAF could add “US$318 billion in additional costs,” which it warned may affect air connectivity.