IATA Chief's 5 Key Takeaways on the Future of Global Aviation

Skift

2 days ago

The IATA Chief reserved some of his strongest words for the European Union's approach to Sustainable Aviation Fuel (SAF), calling its mandates ineffective and even counterproductive.
This year will be a better for airlines than last year, although slightly below the International Air Transport Association's (IATA) earlier projections. That was the verdict of IATA Director General Willie Walsh on Monday.
'The biggest positive driver is the price of jet fuel which has fallen 13% compared with 2024 and 1% below previous estimates,' Walsh said. 'We anticipate airlines flying more people and more cargo in 2025 than they did in 2024, even if previous demand projections have been dented by trade tensions and falls in consumer confidence. The result is an improvement of net margins from 3.4% in 2024 to 3.7% in 2025.'
IATA expects passenger revenues to reach an all-time high of $693 billion in 2025, a 1.6% rise over 2024. This will also be bolstered by an additional $144 billion in ancillary revenues.
Speaking at a press briefing at the IATA annual general meeting in Delhi on Monday, Walsh spoke candidly about the pressures mounting across the industry — from rising tariffs and supply chain choke points to geopolitical risks and policy missteps.
Here are five big takeaways from the session that aviation stakeholders should be watching.
1. Tariffs on Aircraft Parts Could Unravel a Stable Global System
Walsh warned that the re-emergence of tariffs on aerospace components, including aircraft engines, threatens to create new complications in a sector already operating on thin margins.
'Obviously our desired position is that aerospace and aircraft engines be excluded from tariff regimes. Return to the 1979 agreement, where it is exempt. It is a global supply chain. It's functioning very well. Starting to unpick that by applying tariffs is going to become very complex.'
While no sharp price increases have materialised yet, Walsh said that some key suppliers have indicated that it is something that they're looking at.
'We don't want to see any of the manufacturers or suppliers using tariffs as an excuse or an opportunity to increase their prices to the industry,' he said.
Any shift that makes aircraft more expensive would be 'an unwelcome development,' he added — one that airlines would strongly resist.
2. Supply Chain Delays Are Capping Growth
Global aviation demand has bounced back. But aircraft deliveries and parts availability haven't caught up. That mismatch is now dragging down capacity and limiting airlines' ability to grow.
'Growth is lagging behind the demand and has done for some time, which means that there are airlines that are missing out on opportunities to expand their networks and provide new options to their customers.'
The result? Record-high load factors.
'We're looking at seat factors over 84%. I didn't think I would ever see load factors at that level. When we hit 82.6% in 2019, I thought that would stand as the all-time record,' Walsh said.
And 84% average across a year means that many flights are operating at full capacity — with passengers unable to book seats on their preferred routes.
3. Geopolitics Still Shapes Route Maps
Walsh acknowledged that airspace closures and global tensions remain a constant threat — but also something the industry has learned to navigate quickly.
'Geopolitics has always been a factor in our industry. We're a very resilient industry. And we're very quick to be able to adapt. So any change in a geopolitical environment… we quickly adjust to find alternative routing.'
Still, the cost of rerouting and limited access is real, especially when already tight capacity leaves little room for flexibility.
'We prefer that airspace is open to everybody everywhere, but you know, the reality of it is where airspace is closed, we quickly adapt.'
4. India's Long-Haul Ambitions Need Matching Access
India's airlines are finally building the long-haul fleet needed for international growth. But Walsh cautioned that regulatory access must keep up with this newfound capability.
'Around two or three years ago, there were less than 50 widebody aircraft based in India. For a country of this size and a population of over a billion people, to have less than 50 widebody aircraft is astounding.'
Now, with IndiGo and Air India expanding their long-haul fleets, that picture is changing. But Walsh warned that this shift must be matched by changes in bilateral air rights.
'As we see the expansion of the carriers in India accessing new markets, you will have to see a corresponding change to the approach with access. Because Indian carriers will want access to markets right across the world.'
Walsh called the European Union's approach to Sustainable Aviation Fuel (SAF), ineffective and even counterproductive.
'The principal criticism recently is because of their mandate to include SAF, what we've seen is the fuel suppliers have used that as an opportunity to add what they're calling a compliance fee.'
This fee, he said, has added $1 billion to airline fuel costs in the EU — without delivering the environmental benefits intended.
'EU's mandate has done nothing to stimulate additional production but has done a lot to enable the fuel suppliers to increase their charges and offer increased costs to airlines,' he said.
Walsh was blunt: 'We've always argued that mandating something that doesn't exist makes no sense.'
He added that these policies must be tested against actual outcomes — not just intentions.
'There are people who say these mandates are positive because they stimulate production. We don't see any evidence of that. What we see is these mandates are not being met… and the people required to fulfil the mandate are being fined. They're happy to accept those fines and just pass them on to airlines, so consumers at the end of the day are paying more. There's zero environmental benefits.'