The global airline industry is expected to see a ¡°slight¡± rise in profit in 2025 despite ¡°ongoing cost and supply chain challenges¡±, according to industry association IATA.

IATA¡¯s latest forecast predicts a net profit for the airline industry of $36.6 billion next year, which compares to an expected profit of $31.5 billion in 2024. Despite this projected increase in profitability in 2025, it still only represents a profit margin of 3.6 per cent (up from a margin of 3.3 per cent this year).

Average net profit per passenger is forecast to be $7 in 2025, which would be an improvement on 2024¡¯s expected profit of $6.4 per passenger but still down on 2023¡¯s figure of $7.9 per passenger.

The association also forecasts that airline passenger numbers will increase by 6.7 per cent year-on-year to reach 5.2 billion in 2025, which would be the first time that global air traffic has exceeded the five billion milestone in a year. The total number of flights is also predicted to reach 40 million next year.

Willie Walsh, IATA¡¯s director general, said airline profits in 2025 will be ¡°hard-earned¡±, as they take advantage of lower oil prices, as well as maintaining higher load factors (above 83 per cent) and ¡°tightly controlling¡± costs.?

¡°All these efforts will help to mitigate several drags on profitability which are outside of airlines¡¯ control: namely persistent supply chain challenges, infrastructure deficiencies, onerous regulation and a rising tax burden,¡± added Walsh.

¡°With margins that thin, airlines must continue to watch every cost and insist on similar efficiency across the supply chain - especially from our monopoly infrastructure suppliers who all too often let us down on performance and efficiency.¡±

European airlines are expected to make a net profit of $10 billion in 2024 with a net margin of 3.9 per cent and a profit per passenger of $8.20. Net profit is forecast to rise to $11.9 billion in 2025, with a margin of 4.4 per cent and a per passenger profit of $9.20.

¡°Europe?faced numerous challenges impacting competitiveness in 2024, including rising wages, fleet groundings, noise-related flight restrictions, increasing airport charges, onerous regulations and high national taxes,¡± said IATA in its report.

¡°The ongoing war in Ukraine continues to affect the continent¡¯s carriers with 20 per cent of its airspace closed, resulting in longer routes to some Asia destinations as Russian airspace remains off-limits to European carriers.

¡°Nonetheless, 2025 is expected to see a slight upturn in profitability largely driven by the LCC (low-cost carrier) sector as it turns its back on the 2024 peak in fleet groundings due to supply chain issues.¡±