IATA says turbulence in global economy won't have major impact on airlines
NEW DELHI, India -- Global financial uncertainty will have only a mild impact on 2025 airline performance, according to a newly released IATA forecast.
The trade group now projects global airline revenues of $979 billion this year, down from its forecast in December that the industry would realize revenue of $1 trillion for the first time.
• Related: IATA industry forecast for 2024
But revenue reductions will be almost entirely made up for by lower-than-projected fuel costs. IATA now expects a global fuel bill of $236 billion for airlines in 2025, with average jet fuel prices of $86 per barrel. That compares to an average per-barrel cost of $99 in 2024 and industrywide fuel costs of $261 billion.
Overall, IATA now projects industry 2025 net profits of $36 billion, only slightly down from its December projection of $36.6 billion.
Speaking here at the IATA Annual General meeting on June 2, the trade group's chief economist, Marie Owens Thomsen, explained that IATA's projection assumes global GDP will grow 2.5% in 2025, down from 3.3% growth last year. The trade group is assuming a slow U.S. growth rate of 1.5%.
IATA does not expect a global recession, in part because of the positive macro impact of cheap fuel and in-part because Trump administration tariffs only impact the manufacturing sector and not the servicing sector, which represents more than half of the global economy.
Tariffs' long-term impact
Still, Thomsen said that increases in tariffs and trade barriers will have a long-term downward impact on global flight demand. U.S. tariffs are currently at their highest level since the 1930s.
"Tariffs are a tax, and anything that you tax will shrink," she said.
The more immediate impact of tariffs, though, could be on aircraft production costs, since suppliers Airbus, Boeing and others source parts for any particular plane from all over the world.
IATA director general Willie Walsh called for aircraft and engine parts to be exempted from all global tariffs.
He also said airlines would resist cost increases for aircraft unless suppliers can demonstrate justification.
"We don't want to see any of the manufacturers, any of the suppliers using tariffs as an excuse or an opportunity to increase their prices to the industry," he said.
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