Despite a Record Year, Airlines Are Grappling With Big Challenges
Published on December 31, 2025 at 02:12AM
The global airline industry is on track to post an all-time profit high of nearly $40 billion in 2025, according to trade group IATA, surpassing the pre-pandemic 2019 figure of $26 billion, but carriers are still managing a net margin of just 4% -- roughly $7.90 per passenger. Economist adds: Not everything has been in the ascent. European and North American airlines, which account for three-fifths of the industry's net profits, have had to contend with circuitous long-haul routes to avoid Russian airspace since the start of the war in Ukraine. This year parts of the Middle East became no-go zones after Israel's strike on Iran in June. America's airlines were hit by a government shutdown that stopped federal workers from travelling and kept unpaid air-traffic controllers at home, disrupting flights. What is more, despite a drop in fuel prices, which account for 25-30% of airlines' operating expenses, other costs have risen. Airlines flew 4.8 billion passengers in 2024, beating the 2019 peak, and that figure likely reached 5 billion in 2025 as combined revenues topped $1 trillion for the first time and load factors hit a record of nearly 84%. But the industry is flying older planes because Boeing and Airbus can't deliver enough new ones. The duopoly shipped under 1,400 aircraft in 2025, well below the 2018 record of just over 1,600. Boeing has struggled since two fatal 737 MAX crashes in late 2018 and early 2019 led to a 20-month grounding, and a fuselage panel blew off another 737 MAX mid-flight in early 2024. Airbus cut its 2025 delivery target from 820 to 790 in early December due to a supplier's production flaw, and Pratt & Whitney engine problems have grounded a third of the global A320neo fleet. IATA estimates the aircraft shortage won't resolve before 2031 at the earliest, and the global fleet's average age has climbed to 15 years from 13 in 2019. Annual fuel efficiency gains have slowed from about 2% to 0.3% in 2025, and an IATA and Oliver Wyman report pegs the cost of aging fleets -- extra fuel, repairs, spare parts -- at over $11 billion in 2025.
Published on December 31, 2025 at 02:12AM
The global airline industry is on track to post an all-time profit high of nearly $40 billion in 2025, according to trade group IATA, surpassing the pre-pandemic 2019 figure of $26 billion, but carriers are still managing a net margin of just 4% -- roughly $7.90 per passenger. Economist adds: Not everything has been in the ascent. European and North American airlines, which account for three-fifths of the industry's net profits, have had to contend with circuitous long-haul routes to avoid Russian airspace since the start of the war in Ukraine. This year parts of the Middle East became no-go zones after Israel's strike on Iran in June. America's airlines were hit by a government shutdown that stopped federal workers from travelling and kept unpaid air-traffic controllers at home, disrupting flights. What is more, despite a drop in fuel prices, which account for 25-30% of airlines' operating expenses, other costs have risen. Airlines flew 4.8 billion passengers in 2024, beating the 2019 peak, and that figure likely reached 5 billion in 2025 as combined revenues topped $1 trillion for the first time and load factors hit a record of nearly 84%. But the industry is flying older planes because Boeing and Airbus can't deliver enough new ones. The duopoly shipped under 1,400 aircraft in 2025, well below the 2018 record of just over 1,600. Boeing has struggled since two fatal 737 MAX crashes in late 2018 and early 2019 led to a 20-month grounding, and a fuselage panel blew off another 737 MAX mid-flight in early 2024. Airbus cut its 2025 delivery target from 820 to 790 in early December due to a supplier's production flaw, and Pratt & Whitney engine problems have grounded a third of the global A320neo fleet. IATA estimates the aircraft shortage won't resolve before 2031 at the earliest, and the global fleet's average age has climbed to 15 years from 13 in 2019. Annual fuel efficiency gains have slowed from about 2% to 0.3% in 2025, and an IATA and Oliver Wyman report pegs the cost of aging fleets -- extra fuel, repairs, spare parts -- at over $11 billion in 2025.
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