Global airlines are projected to transport a record number of passengers in 2026, but their profits are expected to be cut in half compared to 2025, primarily due to escalating fuel prices and regional conflicts, according to the International Air Transport Association (IATA).
IATA forecasts that its 370 member airlines, which represent 85 percent of global air traffic, will carry 5.1 billion passengers this year. This figure marks a 2.4 percent increase from the estimated 4.98 billion passengers in 2025. While the industry is anticipating growth, the net profit margin is predicted to shrink significantly.
IATA Director General Willie Walsh stated that while geopolitical disruptions, particularly in the Middle East, and rising fuel costs have negatively impacted the industry's outlook, they do not constitute a crisis. He noted that excluding the Middle East region, global air traffic growth is projected at 3.5 percent. However, overall industry profits are expected to decline from $45 billion in 2025 to $23 billion this year, with net margins falling from 4.2 percent to 2.0 percent.
The substantial increase in fuel costs is a major contributing factor. IATA member airlines' revenue is anticipated to rise by nine percent to $1.165 trillion in 2026. Despite this revenue growth, airlines are absorbing a portion of the fuel price shock, which is reflected in their reduced profitability. The net profit per passenger is expected to fall to $4.50, half the amount recorded in 2025.
Profitability is expected to vary significantly by region. Middle Eastern airlines are forecast to experience losses and face a challenging year, with their recovery likely dependent on pricing strategies rather than a rapid return of passenger volumes. In contrast, European airlines are projected to achieve the highest net margin at 3.1 percent, followed by North American (2.5 percent) and Asia-Pacific (2.1 percent) airlines.
Despite ongoing geopolitical uncertainties, IATA remains optimistic about travel demand. The association pointed out that average airline ticket prices have decreased by 26 percent over the past decade, suggesting underlying resilience in passenger willingness to travel.
