IATA Reports Airlines Scoring Record Profits—but Warns of Growing Headwinds

As global travel surges past pre-pandemic levels and passenger demand shows no signs of slowing, the airline industry finds itself at a critical juncture. The financial figures look healthy on the surface—projected to bring in $979 billion in revenue this year—but IATA Director General Willie Walsh says the story beneath those numbers is more complex.

Speaking at the 81st IATA Annual General Meeting in Delhi, India, Walsh delivered a wide-ranging keynote that outlined both the triumphs and the persistent challenges facing commercial aviation. From razor-thin margins and global conflict risks to delayed aircraft deliveries and outdated infrastructure, his message was clear: the industry’s resilience is legendary, but external inefficiencies are throttling its potential.

Profitability Up, But Margins Still Razor-Thin

“I’m pleased to report that the airline industry remains strong and relevant,” Walsh began. IATA expects airlines to post a combined profit of $36 billion in 2025. But when spread across more than 5 billion passengers, that equates to just $7.20 in net profit per traveler—or a margin of just 3.7 percent.

Photo: Courtesy of Joel Ambass / Unsplash

“Our profitability is not commensurate to the enormous value that we create at the heart of a value chain supporting 3.9 percent of global GDP and providing and supporting jobs for 86.5 million people,” he said. “Airline margins are half what most other industries earn, including those in the air transport value chain.”

Still, Walsh acknowledged the industry’s historic resilience. “The pioneers who founded our association 80 years ago would be proud,” he added, noting that today’s global network is safer and more accessible than ever.

Safety Gains Tempered by Government Inaction

Flying remains the safest mode of long-distance transport. In 2024, just seven fatal accidents occurred among 40.6 million flights, resulting in 244 fatalities among 4.8 billion passengers.

But IATA’s goal remains “zero accidents and zero fatalities,” and Walsh emphasized that better use of data is key. The Global Aviation Data Management (GADM) program collected information from over 8 million flights last year, logging 50,000 incidents and $11 billion in maintenance costs. “As artificial intelligence capabilities grow, each new datapoint carries evermore potential to make flying safer,” he said.

Photo: Willie Walsh, Director General IATA. Courtesy of IATA

However, two major obstacles remain: incomplete accident investigations and fragmented intelligence sharing around conflict zones.

“Less than half of the accident investigations over the last six years have published a final report—little improved since we highlighted this last year,” Walsh noted. “Missing insights from accident reports are lost safety opportunities. This dereliction of duty by governments… must be addressed as a priority at the ICAO Assembly later this year.”

He also pointed to a troubling uptick in threats to civil aviation from armed conflicts. “In the last 12 months, two civil aircraft were downed in conflict zones, several airports were bombed, and incidents of GPS interference rose sharply.”

The solution, he said, lies in transparent data sharing. “The most effective way to ensure civil aviation is never the target of military operations is by sharing information.”

The Cost of Flying Keeps Dropping—But There’s a Catch

Despite rising fuel, labor, and tax burdens, airfares today are 40 percent cheaper in real terms than a decade ago. “You are doing an amazing job,” Walsh told all the airline CEOs at the organization’s Annual General Meeting.

Photo: IATA AGM 2025. Courtesy of IATA

“Competitive market forces will continue that trend, provided we have sufficient capacity to meet demand, regulations that create value, and processes that are efficient.”

But capacity is a growing concern—both in terms of available aircraft and adequate airport infrastructure.

Aircraft Shortages and Delivery Delays

“The manufacturing sector is struggling significantly, and everyone in this room shares that frustration,” Walsh said as executives from Boeing and Airbus listened cautiously.

The current backlog of 17,000 aircraft implies a 14-year wait between order and delivery. Scheduled deliveries for 2025 are 26 percent lower than what was promised just a year ago. Meanwhile, over 1,100 aircraft less than 10 years old are sitting idle in storage—almost three times the pre-pandemic norm. The annual fleet replacement rate has also dropped to 3 percent, far below the usual 5–6 percent.

“It’s just not acceptable that manufacturers estimate it could take until the end of the decade to sort this mess out,” he said, calling for transparency in the parts market and for aerospace to be kept out of international trade disputes. “But real solutions must come from the manufacturers. The only thing I can say is that solutions cannot come fast enough.”

Infrastructure Bottlenecks

On the ground, capacity challenges are being addressed more proactively—at least in parts of the world, according to the Director General.

“India is opening new secondary airports in Delhi and Mumbai. Vietnam aims to have an airport within 100 kilometers of 97 percent of its population. Morocco is doubling airport capacity by 2030. Dubai will begin opening the world’s biggest airport in phases, and Singapore just broke ground on a mega-terminal,” Walsh said.

Americas: Recovery, Opportunity, and Urgency

In the Americas, aviation is an essential driver of economic and social progress, supporting over 16 million jobs and contributing nearly $1.7 trillion to regional GDP, said Peter Cerda, IATA’s Regional Vice President for the Americas.

Photo: Peter Cerdá, VP Americas IATA. Courtesy of IATA

Recovery is well underway. In April 2025, air travel in Latin America and the Caribbean grew 10.9 percent year-on-year, while North America posted a 1.6 percent increase.

As U.S. demand moderates, airlines are reallocating capacity to fast-growing markets like Argentina, Guatemala, and Guyana—where supportive policies, and progressive governments like those of Javier Milei and Nayib Bukele are enabling growth.

But challenges remain. Cerda warned of persistent obstacles: outdated regulations, excessive taxation, and strained infrastructure.

Photo: Tocumen International Airport Terminal 2, Copa Airlines. Courtesy of Enrique Perrella

According to Cerda, Brazil’s proposed 26.5 percent VAT, Canada’s rising travel costs, and regulatory uncertainty in Colombia and Peru threaten progress. Meanwhile, infrastructure shortfalls in Mexico City, Bogotá, and Santiago risk limiting future growth.

“Aviation isn’t a luxury—it’s a necessity,” Cerda said. “Where governments enable, we see progress. Where they don’t, we see stagnation.”

In Europe? Not well

In Europe, however, the situation is worth keeping an eye on. “More talk than action,” Walsh said, singling out the European Commission’s inaction on the long-delayed Single European Sky initiative, which could reduce delays, emissions, and costs.

“Narrow national interests appease air traffic controllers at the expense of travelers. We’ll likely see this play out again in a disappointing summer of delays,” said the Director General.

Photo: Courtesy of Amsterdam-Schiphol. Airport

Walsh saved his sharpest criticism for the Dutch government, which has unilaterally capped traffic at its busiest gateway, wreaking havoc on the airlines that operate in and out of the Netherland’s busiest gateway. “To shrink [Amsterdam] Schiphol, a feigned ‘balanced approach’ consultation did not even consider actions by airlines to reduce noise. We must continue to resist this short-sighted madness.”

And then there’s London Heathrow. “Its seemingly unconstrained ability to collect more charges with no improvement in performance keeps it firmly on our watch list,” Walsh said. “We’ll look forward to good news from the ‘Re-imagining Heathrow’ initiative… although I do think it will take much more than imagination to solve decades of misguided regulation and management.”

Bad Regulation Is Holding Back Affordability

Airline affordability is also under pressure from regulations that Walsh described as politically motivated and economically unsound. Chief among them is Europe’s notorious EU261 compensation regime.

Photo: Paris Charles de Gaulle Airport. Courtesy of Alain Leduc for Groupe ADP

“Whether it’s the power, IT, or air traffic management that fails, when air travel is disrupted, airlines pay for passenger care and assistance,” Walsh said. “There has been no reduction in delays or cancellations over EU261’s 20-year history—it’s had no problem-solving benefit. But there has been lots of cost—currently €5 billion annually.”

And yet, similar policies are cropping up in the U.S. and Canada. “At least Australia resisted,” he said. “Hopefully, the new U.S. administration and the new Canadian government will come to a similar conclusion.”

Digital Transformation: A Path to Greater Efficiency

One bright spot in the industry’s push for affordability is digitalization. “Digital ID is the game changer,” Walsh said, noting travelers’ preference for smartphone-enabled processes over long immigration queues. With full adoption, passengers could “securely walk through airport processes without any identity document checks.”

Photo: Courtesy of Alaska Airlines

But that will require global cooperation: the ICAO must finalize a standard, governments must issue digital credentials, and countries must agree on how traveler information is shared without violating data privacy laws.

For cargo, a similar transformation is coming via the ONE Record initiative. Set to launch globally in January 2026, it aims to unify the fragmented documentation process that has long plagued air freight. “The ONE Record global data-sharing standard will be the single accurate and real-time source of truth for the entire value chain that built it together.”

Looking Ahead

IATA now counts more than 350 airline members, with 31 joining since the last AGM—including Southwest Airlines, a founding low-cost carrier that Walsh called “proof that IATA’s work… cuts across the diversity of airline business models.”

When surveyed, travelers said their top three priorities are safety, affordability, and sustainability. “This matches closely the agenda that you, our members, have set for IATA,” he concluded.

Despite formidable challenges, Walsh remains optimistic. “With growing membership and a strong mission, I am convinced that IATA’s best days are still in our future.”

Next year, the 82nd edition of the IATA AGM will be celebrated in Rio de Janeiro, hosted by LATAM Airlines.