The International Air Transport Association (IATA) has published a report on the regional outlook for the performance of airlines around the world in 2025, compared to the nearing end of 2024.
IATA stated that all regional areas are expected to see improved financial performance in 2025 compared to 2024, with all regions achieving net profits in both 2024 and 2025.
However, profitability varies significantly depending on the airline and region. For example, African airlines are expected to have the weakest net profit margin at 0.9%, while Middle Eastern airlines are expected to have the strongest at 8.2%.
**The Middle East: The Biggest Beneficiary of the War**
IATA explained that airlines in the Middle East achieved the strongest financial performance in 2024, evident by having the highest net profit per passenger among all regions.
Airlines benefited from the region's strong economic performance, strategic infrastructure investments, supportive government policies, and the closure of Russian airspace to European, American, and some Asian airlines.
The Middle East was the only region to witness an increase in passenger revenues in 2024, supported by strong long-term business.
It continued: "Revenues may stabilize in 2025 due to expected capacity expansion. Despite geopolitical conflicts in the region, Gulf airlines remained largely unaffected. However, ambitious growth targets for 2025 may be impacted by supply chain issues, aircraft delivery delays, and limited engine availability."
**Dollar Shortage Hits African Aviation**
In contrast, African airlines face high operating costs, with low spending tendencies on air travel. IATA noted that the shortage of US dollars in some economies, along with challenges in infrastructure and air connectivity, hinder the expansion and performance of the aviation sector. Despite these challenges, there is sustained demand for air travel, which is expected to slightly improve profitability in the region in 2025.
**Europe Faces Competitive Challenges**
In Europe, airlines have faced numerous challenges affecting competitiveness in 2024, including rising wages, fleet groundings, noise restrictions on flights, increased airport fees, burdensome regulations, and high national taxes. The ongoing war in Ukraine continues to affect European airlines, with 20% of their airspace closed, leading to longer routes to some Asian destinations as Russian airspace remains closed to European airlines. However, a slight improvement in profitability is expected in 2025, driven largely by the low-cost sector, which is expected to recover from fleet groundings in 2024 due to supply chain issues.
**Labor Strikes and Technology Failures Hit North America**
In North America, airlines continue to achieve the highest profitability levels, though at lower levels than before the pandemic. This is due to clear weaknesses in the low-cost supply chain sector, which has been particularly affected by delays in the delivery of new-generation aircraft and reliance on a single aircraft type. While high wages have reduced the competitive advantage of low-cost airlines compared to network carriers, profitability is expected to improve in 2025, even with the continuation of issues like employee strikes and IT system failures, whose effects are likely to persist into the new year.
**Asia-Pacific: Strong Passenger Revenue Growth**
In the Asia-Pacific region, the largest market in terms of revenue per passenger kilometer, China accounts for over 40% of the traffic. In 2024, revenue per passenger kilometer grew by 18.6%, partially driven by market stimulus from the easing of visa requirements for several countries, including China, Vietnam, Malaysia, and Thailand. Chinese airlines reported net losses in the first half of 2024 due to supply chain problems, market oversupply, and a reduction in the number of weekly flights from China to the US (a third less than pre-pandemic levels). The Asia-Pacific region also saw the largest decline in revenue in 2024. However, with strong demand and increased load factors, profitability is expected to slightly improve in 2025.
**Latin America: A Mixed Outlook**
In Latin America, which is home to airlines thriving in some areas and facing significant financial difficulties in others—including bankruptcy filings under Chapter 11—currency depreciation in some countries with large local operations has posed several challenges, as major cost items such as fleet expenses and debt service are paid in US dollars. Profitability is expected to improve in 2025 as airlines emerge from Chapter 11 restructuring with stronger competitive positions, along with favorable exchange rate movements.
**Despite the Challenges, Air Travel Remains a Safe Industry**
Despite the challenges facing the aviation sector globally, air travel continues to deliver increasing value to its customers. A public opinion survey (conducted in 14 countries with 6,500 participants who traveled at least once last year) revealed that 96% of travelers were satisfied with their travel experience. Furthermore, 88% affirmed that air travel makes their lives better, and 78% agreed that air travel provides good value for money.
Travelers rely on a safe, sustainable, efficient, and profitable aviation industry. The survey conducted by IATA also highlighted the important role of the aviation sector from the passengers' perspective:
- 90% agreed that air travel is essential for modern life
- 90% agreed that air connectivity is crucial for the economy
- 88% said air travel has a positive impact on communities
- 83% stated that the global air transport network is a major contributor to achieving the United Nations’ sustainable development goals
- 84% expressed concern about the success of the aviation industry
The aviation sector remains committed to achieving net-zero carbon emissions by 2050. Travelers expressed high confidence in this goal, with 81% agreeing that the sector is committed to achieving this ambitious target, and 77% agreeing that aviation leaders take the climate challenge seriously.
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