Airlines less optimistic for 2025, facing ‘headwinds': IATA
Airlines yesterday revised down their traffic and profit forecasts for 2025, citing 'headwinds' for the global economy, with industry chiefs warning of the risk of increased tariffs impacting the sector.
The International Air Transport Association (IATA) estimates fewer than five billion air journeys will take place this year, compared with the previously forecast 5.22 billion.
'The first half of 2025 has brought significant uncertainties to global markets,' IATA's Director General Willie Walsh told its annual general meeting in New Delhi.
But he added: 'Considering the headwinds, it's a strong result that demonstrates the resilience that airlines have worked hard to fortify.'
Cumulative airline profits will reach $36 billion this year, $600 million less than expected, IATA said.
Commercial aviation revenues are expected to remain below the $1 trillion forecast in the previous December projections, with IATA now reporting $979 billion.
Walsh, addressing IATA delegates, called for the aviation sector to be spared from increased tariffs -- though he did not name US President Donald Trump, who unveiled sweeping duties on trading partners in April.
'Trade tensions'
While looking at profits, Walsh warned that 'perspective is critical' to put industry-wide figures into context, saying that per passenger, it was still a narrow margin.
'It's still a thin buffer and any new tax, increase in airport or navigation charge, demand shock or costly regulation will quickly put the industry's resilience to the test,' he said.
'Policymakers who rely on airlines as the core of a value chain that employs 86.5 million people and supports 3.9 percent of global economic activity must keep this clearly in focus.'
The organisation also expects 69 million tonnes of cargo to be transported by air this year, down from the 72.5 million previously expected.
A barrel of Brent North Sea crude, the international benchmark, stands below $65 as a result of Trump's tariffs, his call to 'drill baby drill' and especially a decision by OPEC+ to hike crude output quotas.
This represents an immediate boon for airlines.
Jet fuel is expected to average $86 a barrel in 2025, well below the $99 average in 2024, 'accounting for 25.8 percent of all operating costs', IATA added.
The 2025 total fuel bill of $236 billion is $25 billion lower than in 2024.
Among the 'risks' weighing on commercial aviation, IATA identified conflicts such as the war in Ukraine, as well as 'trade tensions'.
'Tariffs and prolonged trade wars dampen demand for air cargo and potentially travel,' IATA said.
'Additionally, the uncertainty over how the Trump administration's trade policies will evolve could hold back critical business decisions that drive economic activity, and with it the demand for air cargo and business travel.'
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