Trade tensions, political and economic uncertainty dim air travel outlook

Traveller forecast trimmed, but higher profits expected despite headwinds

- Kok Yufeng

NEW DELHI - Trade tensions and a decline in consumer confidence amid political and economic uncertainty have dented otherwise strong projected demand for air travel.

While airlines are expected to carry a record 4.99 billion travellers in 2025 — 4 per cent more than in 2024 — the latest forecast is lower than the 5.22 billion projected by the International Air Transport Association (Iata) in December 2024.

Still, airlines are expected to turn in higher profits despite the headwinds.

Iata, a global trade body representing 350 carriers, said on June 2 that airline net profits are projected to be US$36 billion (S$46.4 billion) in 2025, up from US$32.4 billion in 2024 but slightly below the earlier forecast of US$36.6 billion for 2025.

Net profit margins are also expected to rise to 3.7 per cent in 2025, up from 3.4 per cent in 2024.

Iata director-general Willie Walsh said 2025 will be a better year for airlines, even with the significant uncertainties in global markets in the first half of the year.

"Considering the headwinds, it's a strong result that demonstrates the resilience that airlines have worked hard to fortify," he added in a statement issued at the association's annual general meeting in New Delhi.

Iata will hold its next annual meeting in 2026 in Rio de Janeiro, Brazil.

The Asia-Pacific is the largest and fastest-growing air travel market in terms of traffic, Iata said, and passenger demand in the region is expected to be strong given the relaxation in visa requirements in several Asian countries such as China, Vietnam, Malaysia and Thailand.

However, the association noted economic challenges as gross domestic product forecasts for the region, especially for China, have been revised downwards.

Mr Walsh said the biggest positive driver of profitability has been the 13 per cent fall in jet fuel prices.