Global airlines expect passenger traffic to keep rising in 2026, but the industry’s profit outlook has weakened sharply as fuel prices and Middle East disruptions weigh on margins.
By yourNEWS Media Newsroom
Airlines are expected to carry more passengers in 2026 but earn only about half as much profit as they did last year, according to projections released Sunday by the International Air Transport Association.
The trade group, whose 370 member airlines account for 85 percent of global air traffic, forecast that carriers will transport 5.1 billion passengers this year. That would mark a 2.4 percent increase from 2025, when passenger traffic was estimated at 4.98 billion. The industry surpassed 4 billion passengers in 2023.
The passenger growth comes despite higher fuel costs, rising fares and disruptions tied to the war in the Middle East. IATA Director General Willie Walsh told reporters the industry is not facing a collapse comparable to the Covid-19 pandemic, when air travel was sharply curtailed in 2020 and 2021.
“I don’t see this as a crisis,” Walsh said.
“You’re looking at an industry that is forecasting growth,” he said. “If you extract the impact of the Middle East, we’re looking at growth of 3.5 percent.”
The increase in traffic, however, will not translate into stronger earnings. IATA said airline profits are expected to fall from $45 billion in 2025 to $23 billion this year. Net margins are projected to decline from 4.2 percent to 2.0 percent.
“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” Walsh said in a statement.
The association estimated net profit at $4.50 per passenger, about half the level recorded in 2025.
“Under the circumstances, that shows resilience. But it won’t even buy you a hot dog at most of the FIFA World Cup venues and it does not leave much of a buffer should other costs or taxes start rising,” Walsh said.
Fuel remains the largest pressure point in the forecast. IATA said fuel costs are increasing and carriers are passing part of those increases to travelers through higher ticket prices. Still, airlines are absorbing some of the additional cost, limiting profitability.
“Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines,” IATA said.
Even with weaker profits, industry revenue is expected to rise. IATA projected member airline revenue will grow 9 percent this year to $1.165 trillion.
The impact is expected to vary by region. Middle Eastern airlines are projected to face the most difficult outlook, with net margins turning negative. The region’s carriers, including Emirates and Qatar Airways, have traditionally benefited from access to abundant fuel supplies, but the war has disrupted operations and affected traffic patterns.
For Middle Eastern carriers, “the immediate recovery path is likely to be driven more by pricing than by a rapid return of volumes,” IATA said.
European airlines are forecast to post the strongest profitability, with a projected net margin of 3.1 percent. North American airlines are expected to follow with a 2.5 percent net margin, while Asia-Pacific carriers are projected at 2.1 percent.
IATA said geopolitical uncertainty remains significant and that the duration of the war cannot be predicted. Even so, the group said it is not currently worried about passenger demand.
The association pointed to longer-term fare trends as one reason travel has continued to hold up. According to IATA’s calculations, the average airline ticket price has fallen 26 percent over the past 10 years.
The forecast shows an industry still expanding after the pandemic-era collapse, but with much thinner financial protection. Airlines are expected to fill more seats in 2026, while higher fuel costs, war-related disruption and regional weakness leave carriers with reduced profits and narrower margins.
Original article
Comments