In response to global trade wars and the economic slowdown, airlines have cut their traffic and profit forecasts for 2025.
The International Air Transport Association (IATA) now predicts fewer than five billion air trips this year, compared to the earlier forecast of 5.22 billion due to these "headwinds."
Additionally, the organisation estimates that airlines’ cumulative net profit will reach $36 billion, $600 million less than previously expected, according to its annual general meeting in New Delhi.
Commercial aviation revenue is also set to fall short of the previously projected $1 trillion, with IATA now projecting $979 billion.
The organisation also anticipates 69 million tonnes of freight will be transported by air this year, down from the previously expected 72.5 million tonnes.
“The first half of 2025 has brought significant uncertainties to global markets,” noted IATA Director General Willie Walsh.
Addressing IATA delegates, Walsh did not mention US President Donald Trump, who initiated trade offensives in early April, including against close economic partners like the EU.
However, as the sector continues to suffer from a strained supply chain and production delays, Walsh urged, “To avoid further worsening the situation, the aerospace sector should be spared from trade wars.”
Despite these challenges, 2025 is expected to be “a better year for airlines than 2024,” noted IATA, which represents 350 carriers responsible for 80% of global air traffic.
Profits growing
The sector’s health is closely linked to economic growth, which IATA expects to decline to an average of 2.5% globally in 2025, down from 3.3% last year.
Nevertheless, “airlines’ profitability is expected to improve,” with a projected net margin of 3.7% compared to the previously expected 3.6% this year, largely due to falling oil prices.
Brent crude is currently trading below $65 a barrel, influenced by Trump’s trade wars, his “drill, baby, drill” policy, and an increase in OPEC+ production quotas.
“Jet fuel is projected to cost an average of $86 per barrel in 2025, significantly lower than $99 in 2024, resulting in a total fuel bill of $236 billion, accounting for 25.8% of operating expenses,” stated IATA. In 2024, fuel costs were $25 billion higher for carriers.
Among the “risks” to commercial aviation, IATA identified conflicts like the war in Ukraine and “trade tensions.”
“Tariffs and prolonged trade wars reduce the demand for air freight and potentially travel,” noted IATA.
“In addition, uncertainty about how the Trump administration’s trade policies will evolve could delay important decisions that support economic activity,” added the organisation.
Trump initiated a global tariff offensive on 2 April, but the situation remains volatile: apart from delaying some of the surcharges to early July pending negotiations with affected countries, a US court last Wednesday challenged the White House’s authority to impose such measures.
Then, a few hours later, an appeal court upheld the tariffs while considering the substantive issues.
