^{Photo: South China Morning Post}

As the global economy braces for a slowdown in 2025, the aviation industry is charting a remarkably different course — upward. Despite ongoing geopolitical tensions, supply chain disruptions, and weaker global GDP growth forecasts, the airline sector is expected to thrive, with rising revenues, profits, and demand, according to the International Air Transport Association (IATA).

Global Economic Uncertainty vs. Aviation Momentum

The IATA projects that global GDP growth will decelerate to 2.5% in 2025, down from 3.3% in 2024, driven by ongoing trade disputes, military conflicts, and fragile macroeconomic conditions. Yet, airlines are not just weathering the storm — they're gaining altitude.

In its latest industry outlook, the IATA estimates that global net profits will climb to $36 billion in 2025, up from $32.4 billion in 2024, although slightly shy of its earlier forecast of $36.6 billion. The net profit margin is also expected to increase to 3.7%, compared to 3.4% last year.

Record Revenue, Leaner Fuel Costs, and Rising Efficiency

Total airline revenue is forecast to hit a record $979 billion in 2025 — 1.3% higher than 2024 — even though it's marginally lower than the earlier $1 trillion projection. The IATA credits two key drivers behind the profit surge:

• Lower Jet Fuel Prices: Fuel prices are projected to average $86 per barrel in 2025, down from $99 in 2024, significantly easing operational costs. The industry's total fuel bill is expected to shrink by $25 billion, from $261 billion to $236 billion.
• Higher Operational Efficiency: Airlines are expected to achieve a record-high passenger load factor (PLF) of 84%, signaling better seat utilization and cost control, even as fleet expansion remains constrained by aerospace supply chain failures.

According to the IATA, minimal fuel hedging across most airlines in the past year suggests carriers will fully benefit from the dip in fuel prices — a critical advantage as other input costs remain volatile.

Regional Outlook: North America Leads in Profit, Asia-Pacific in Demand

North America remains the financial powerhouse of the global aviation sector, expected to generate the highest absolute profits in 2025. However, it’s the Asia-Pacific region that’s experiencing the most dynamic growth, with revenue passenger kilometers (RPK) — a key industry metric — expected to surge by 9% year over year.

This growth is largely driven by:

• Relaxed visa policies in major markets like China, Vietnam, Malaysia, and Thailand
• Booming middle-class travel demand across India, Southeast Asia, and China
• Tourism recovery, particularly in countries that only recently lifted COVID-era restrictions

While Asia’s momentum is strong, the IATA has cautioned that broader regional GDP projections, especially for China, have been revised downward due to property market instability and weakening consumer demand.

CEOs Remain Confident Despite Geopolitical Shocks

Top airline executives, speaking at the recent World Air Transport Summit, expressed cautious optimism.

Campbell Wilson, CEO of Air India, said the industry is navigating through a year of surprises — “whether it’s politics, tariffs, geopolitics, or conflict zones.” Despite ongoing tensions between India and Pakistan, which led to temporary airspace closures through late June, Wilson is bullish on India’s potential.

“India is now the third-largest air travel market, growing annually at 8% to 10%. If Indians begin flying like the Chinese, international volume will skyrocket,” he noted.

Meanwhile, Adrian Neuhauser, CEO of Avianca, the Colombian flag carrier, acknowledged that while airlines are sensitive to economic downturns, the numbers so far remain strong.

“When the world sneezes, airlines usually get sick fast. But for now, we’re holding up well — load factors are strong, and revenue is stable,” Neuhauser said.

Final Takeaway: Aviation Remains a Rare Bright Spot

Despite macroeconomic clouds, the aviation industry is flying with confidence into 2025. Thanks to lower fuel prices, improved operational efficiency, and surging demand in Asia-Pacific, the sector is proving resilient — and even thriving — in an otherwise cautious global business landscape.

Investors and industry stakeholders should take note: While much of the global economy may be slowing, the skies remain open and promising for commercial aviation.