RIO DE JANEIRO, Brazil — New projections released Sunday by the International Air Transport Association (IATA) paint a mixed picture for the global airline industry in 2026, with resilient travel demand driving a modest uptick in passenger volumes, but soaring fuel costs and regional geopolitical disruption set to cut industry profits in half compared to 2025.
IATA, which represents 370 airlines that collectively handle 85% of the world’s total air traffic, forecasts that member carriers will welcome 5.1 billion passengers this year. That marks a 2.4% increase from 2025’s estimated 4.98 billion passengers, a milestone that continues a steady post-pandemic expansion: the industry first crossed the 4 billion annual passenger threshold back in 2023.
When asked to compare the economic fallout of the ongoing Middle East conflict to the devastating collapse of air travel during the 2020–2021 COVID-19 pandemic, IATA Director General Willie Walsh downplayed the current crisis’s systemic impact. “I don’t see this as a crisis,” Walsh told reporters. “You’re looking at an industry that is forecasting growth. If you extract the impact of the Middle East, we’re looking at growth of 3.5%.”
Even as overall demand holds steady, the combination of war-related regional disruptions and spiking fuel prices has dragged down the industry’s profit outlook sharply. IATA projects total net industry profits will drop from $45 billion in 2025 to just $23 billion this year, pushing net margins down from 4.2% to 2% across the sector. That works out to an average net profit of just $4.50 per passenger — exactly half the per-passenger profit recorded in 2025.
Walsh noted that the slim profit margin demonstrates unexpected resilience amid ongoing headwinds, but it leaves the industry with almost no room to absorb additional cost increases. “Under the circumstances, that shows resilience. But it won’t even buy you a hot dog at most of the FIFA World Cup venues, and it does not leave much of a buffer should other costs or taxes start rising,” he said.
Fuel costs have climbed significantly in recent months, and while carriers have passed a portion of that increase to consumers via higher ticket prices, airlines are still absorbing much of the shock to protect demand. Even with partial price hikes, IATA expects total industry revenue to grow 9% year-over-year to hit $1.165 trillion in 2026. “Airlines are bearing the brunt of the fuel price shock. While air fares are rising, airlines are still absorbing part of the hike in their bottom lines,” the organization explained.
Profitability will vary dramatically across global regions, IATA’s projection shows. Middle Eastern carriers, which have long benefited from access to low-cost local fuel supplies, are expected to face the hardest hit, with projections showing their net margins turning negative for the year. For major regional carriers including Emirates and Qatar Airways, IATA says recovery will depend more on strategic pricing adjustments than a quick rebound in passenger travel volumes: “the immediate recovery path is likely to be driven more by pricing than by a rapid return of volumes.”
Other regions are set to far outperform the Middle East. European carriers are projected to post the strongest net margins at 3.1%, followed by North American airlines at 2.5% and Asia-Pacific carriers at 2.1%.
Despite persistent geopolitical uncertainty and unpredictable timelines for the resolution of the Middle East conflict, IATA remains confident in underlying travel demand. The organization pointed to a long-term trend of falling air fares to support this outlook, noting that average ticket prices have dropped 26% over the past decade even as costs have risen.
