IATA have released its financial forecasts for airlines in 2026, predicting that the industry will bring in a record US$41 billion in profits.
2025 profits are currently predicted in the region of US$39.5 billion. However, while the figure is set to increase next year, IATA believes profit margins will remain at 3.9%. Profit per passenger will also be unchanged, standing at US$7.90, still down from the 2023 high of US$8.50.
Willie Walsh, Director-General of IATA, commended the industry for staying resilient in the face of spiralling prices, geopolitical conflict, and supply chain challenges. But he added:
Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies. They stand at the core of a value chain that underpins nearly 4% of the global economy and supports 87 million jobs. Yet Apple will earn more selling an iPhone cover than the $7.90 airlines will make transporting the average passenger. And even within the air transport value chain, airline margins are totally out of balance, particularly when compared to margins of engine and avionics manufacturers and many of our service suppliers. Imagine the additional power that airlines could bring to economies if we could re-balance value chain profitability, reduce regulatory and tax burdens, and alleviate infrastructure inefficiencies.
Fuel costs are expected to decline in 2026, but airlines’ expenditure will be tempered by labour costs. These remain airlines’ biggest cost component in 2026 at 28%, worsened by inflation and a challenging job market. IATA also highlighted ongoing regulatory costs, including the EU’s recent ruling on cabin baggage.
Regional outlook for 2026
Europe is expected to be the highest-performing region in 2026, despite air traffic control disruption and the cost of sustainable aviation fuel (SAF) mandates. IATA points to the ongoing success of low-cost carriers (LCCs) behind Europe’s growth.
Meanwhile, Latin America is expected to benefit from restructuring efforts, as airlines including Azul bounce back from bankruptcy filings. Greater stability in the region will help consolidate growth on Atlantic routes in spite of reduced demand for intra-American travel.
African airlines will continue to operate on thin margins in 2026. IATA notes that the continent’s industry will experience no drastic growth until GDP per capita rises and costs fall.
Profit-per-passenger remains highest in the Middle East. Supply chain challenges might have complicated fleet growth, but retrofit programmes and life extensions will ensure the region’s fleet remains agile and modernising in 2026.
No longer the most profitable region, North American aviation struggled in 2026 due to tariffs, decreased demand for domestic travel, and the premiumisation trend. However, IATA predicts some of these challenges will ease next year, and demand increase gradually.
Load factors in Asia-Pacific will reach all-time high of 84.4% in 2026, though overcapacity could pose problems. China and India continue to lead expansion in the region, consolidating APAC’s position as the world’s fastest-growing aviation industry.
Join us at Aviation Festival Asia 2026 to discuss the state of the industry.
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