Good morning, I'm pleased to report that the airline industry remains strong and relevant.
- Traveler numbers will soon top 5 billion annually, and
- The 69 million tons of air cargo transported annually accounts for a third of global trade by value.
In 2025 airlines will make a $36 billion profit on revenues of $979 billion. While those are big numbers, let's remember this equates to a net margin of a mere 3.7% or $7.20 net profit per passenger.
Our profitability is not commensurate to the enormous value that we create at the heart of a value chain supporting 3.9% of global GDP and providing and supporting jobs for 86.5 million people.
While airline margins are half what most other industries earn, including those in the air transport value chain, airline resilience is the stuff of legend—as proven in our post-COVID bounce-back.
The pioneers who founded our association 80 years ago would be proud! Their aim for IATA was to promote safe, regular and economical transport for the benefit of the peoples of the world.
Looking at aviation today, we delivered! Flying is safe. And more people and businesses than ever are benefitting from it.
This matters. Like all forms of connectivity, flying makes the world more prosperous. That stands in contrast to isolationism, trade barriers and the fragmentation of the multi-lateral rules-based system. These destroy wealth and lower living standards. For the times we live in, this is an important message.
Working together, IATA supports aviation's benefits through the establishment of global standards, convening power and advocacy to solve problems, providing services to support efficient operations, and data to underpin critical decisions. Our association has a footprint that covers everything from airport codes, safety audits and slot rules to e-tickets, industry data, distribution, and our future sustainability.
And I am pleased to report that IATA is growing even stronger with membership topping 350 airlines. Let's take a moment to recognize the 31 airlines who joined IATA since our last AGM. You can see their logos on the screen.
Among these, special mention goes to Southwest. An originator of the low-fare airline model, it is continuing proof that IATA's work to represent, lead and serve airlines cuts across the diversity of airline business models.
With growing membership and a strong mission, I am convinced that IATA's best days are still in our future. And to give that future focus, we asked travelers what challenges they see as priorities. Their top three are for flying to be even safer, more affordable and sustainable. This matches closely the agenda that you, our members, have set for IATA.
Making Flying Even Safer
Let's begin with safety. It is so core to our industry, that the IATA Operational Safety Audit (IOSA) is a condition of IATA membership and over 100 non-members are also on the registry. Moreover, aviation has long been the safest form of long-distance transport.
In 2024 there were seven fatal accidents among 40.6 million flights, and 244 fatalities among 4.8 billion passengers. Our aim, however, remains a future of zero accidents and zero fatalities. Data is critical to achieving that.
Whether it is safety data from IATA's Global Aviation Data Management (GADM) initiative, Turbulence Aware, or our flagship IOSA and ISAGO audit programs, data helps us to see safety insights that would otherwise be invisible. That is why growing GADM is a top priority. In 2024 GADM collected data covering over 8 million flights, 50,0000 incidents, and $11 billion in maintenance costs. As artificial intelligence capabilities grow, each new datapoint carries evermore potential to make flying safer.
But there are two areas where government inaction is holding us back.
Firstly, 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. Missing insights from accident reports are lost safety opportunities. This dereliction of duty by governments as outlined in the Chicago Convention must be addressed as a priority at the ICAO Assembly later this year.
The second is the effective sharing of information to keep civil aircraft safe and secure as conflict zones proliferate. In the last 12 months, two civil aircraft were downed in conflict zones, several airports with civilian aircraft on the ground were bombed in military operations, and incidents of interference with navigation systems near conflicts rose sharply.
As conflict zones proliferate, we highlighted to the UN Security Council the responsibility of governments to ensure that civil aviation is never the target of military operations, even inadvertently. The most effective way to do that is by sharing information. The imminent adoption of security management systems into the Chicago Convention's Annex 17 adds strength to this obligation. It's a timely action particularly as the ICAO Council recently pointed out the Russian Federation's involvement in 2014 downing of MH17.
Making Air Transport Even More Affordable
Alongside safer flying, travelers want greater affordability. Despite ever increasing cost and tax challenges, the real cost of flying is 40% less than a decade ago. You are doing an amazing job. And competitive market forces will continue that trend, provided we have sufficient capacity to meet demand, regulations that create value and processes that are efficient.
Capacity
Let's start with two dimensions of capacity: availability of aircraft and of infrastructure.
Regarding aircraft, the manufacturing sector is failing badly. And everyone in this room feels that frustration.
- The delivery backlog of 17,000 implies a 14-year wait between ordering and delivery.
- The number of deliveries scheduled for 2025 is 26% less than what was promised a year-ago
- Over 1,100 aircraft under 10 years of age are in storage. That's 3.8% of the entire fleet, nearly three times the pre-pandemic comparison of 1.3%
- And the annual fleet replacement rate of 3% is well below the normal 5-6%
This hits revenues because some demand goes unmet. And scarcity pushes up maintenance and leasing costs.
It's just not acceptable that manufacturers estimate it could take until the end of the decade to sort this mess out.
IATA will help with solutions to bring more transparency and efficiency to the parts market. And, to avoid the situation getting worse, we advocate to keep aerospace outside of trade wars. But real solutions must come from the manufacturers. The only thing I can say is that solutions cannot come fast enough.
The second aspect of capacity is infrastructure. Infrastructure development can best be addressed by Governments, airports and airlines collaborating to understand the genuine requirements of the industry and to ensure appropriate cost-effective infrastructure is available for the future. I'm pleased to say that there have been some positive developments.
- Our host country, India, is opening new secondary airports in Delhi and Mumbai to cope with demand
- Vietnam aims to have an airport within 100km of 97% of its population, and Morocco is doubling its airport capacity by 2030
- Dubai will begin the phased opening of the world's biggest airport while Singapore broke ground on a mega-terminal to open in the mid-2030s
- Latin America's major hubs such as Bogota, Buenos Aires, Lima, Mexico City, Panama City and Sao Paulo have either recently opened new facilities or have expansion projects underway
- The US is pursuing a major air traffic management modernization and, in the UK, Heathrow is buying a backup phone, with a loud ringtone, for their CEO.
Governments around the world are building a competitive future for aviation because they want aviation to contribute even more to their societies and economies.
As always, the exception is Europe. The EC's Draghi report brilliantly described how urgent it is for Europe to improve competitiveness. That includes bringing Europe's air transport infrastructure in line with today's needs and readying it for tomorrow's opportunities. Unfortunately, we see more talk than action.
Case-in-point is the decades-old saga of the Single European Sky. At stake are cost, efficiency, safety and environmental benefits. But 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.
Worse is the case of the Netherlands where the government is willfully undermining competitiveness by destroying capacity under the guise of reducing noise. To shrink 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, lest it inspire copycats.
Competitiveness and capacity go together. Good policies stimulate economies and benefit consumers who want more connectivity—a message worth repeating to any government that will listen.
And I cannot make a speech on this issue without a reference to Heathrow. Its seemingly unconstrained ability to collect more charges with no improvement in performance keeps it firmly on our watch list. We'll look forward to good news from the "Re-imagining Heathrow" initiative. When British Airways and Virgin Atlantic combine to demand action, you have to take notice (believe me, I speak from experience) although I do think it will take much more than imagination to solve decades of misguided regulation and management.
Regulation
Bad regulation can destroy value and stand in the way of affordability. The litmus test for any regulation is cost-benefit analysis. As business leaders we take this much more seriously than regulators. They are not playing with their own money and the difference between political success and solving a problem is often wide. That makes bad regulation far too prevalent.
Europe again provides the example. It is ground-zero of an epidemic of ineffective consumer protection regulation known as EU261. Under EU261, whether it's the power, IT or air traffic management that fails, when air travel is disrupted, airlines pay for passenger care and assistance.
There has been no reduction in delays or cancelations over EU261's 20-year history—it's had no problem-solving benefit. But there has been lots of cost—currently EUR5 billion annually.
It boggles the mind that governments in the US, Canada and elsewhere are putting EU261 style approaches into their own passenger rights regulation.
At least Australia resisted, concluding that air travelers are aptly covered by its standard consumer protection laws. Hopefully the new US administration and the new Canadian government will come to a similar conclusion. We are less hopeful for reform in Europe, where a moderately encouraging proposal has been hijacked by politics, just as we saw with the Single European Sky 2+ package.
Unless Transport Ministers show seriousness in tackling Europe's competitiveness crisis when they meet later this week, we'll get another grubby political deal that the political and bureaucratic Brussels elite will celebrate but will do nothing to reduce delays or make flying more affordable.
Process
The last point on affordability concerns the digitalization of processes to increase efficiency and cut costs.
For passenger travel, Digital ID is the game changer. Travelers are at ease with digitalized travel processes, and they love skipping queues with their smartphone. So, you can imagine how they feel when faced with slow-moving immigration queues checking paper documents—particularly as the information has already been digitally provided to the authorities.
Using digital ID, travelers could securely walk through airport processes without any identity document checks. It's time to go global with Digital ID that has already been proven at several locations and for specific passenger groups. That can happen…
- If ICAO and its member states fast track the completion of the Digital Travel Document standard
- When governments issue digital passport credentials and directly collect data from travelers to issue visas and the OK to travel authorization, and
- With a global agreement on information exchange so that airlines don't fall afoul of data privacy laws in one country when supplying another with required information on travelers
On the air cargo side, the focus is ONE Record. For too long, aircraft have flown faster than the documentation that accompanies shipments—held back by fragmented systems, outdated processes, and limited data visibility. The current system won't meet anyone's expectations as customs requirements evolve and e-commerce volumes surge.
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.
The global rollout starts in January 2026, but to gain the full benefits we'll be counting on two things:
- The industry stakeholders who built ONE Record to use it, and
- Governments to accept ONE Record data in their facilitation processes
In a time of growing trade complexity, industry alignment and regulatory support is more critical than ever. Better compliance, cost savings and faster processing are substantial incentives for everyone to make ONE Record work.
Making Flying Sustainable
And with that, let's turn our attention to the fundamental challenge of sustainability. In 2021 IATA members agreed to achieve net zero carbon emissions by 2050. From the outset we made it clear that it would be challenging and that airlines could not do this on their own. Governments, manufacturers, infrastructure operators, and fuel suppliers, EVERYONE needed to be equally committed.
They all supported with words.
By 2022, ICAO member states agreed to net zero by 2050 and confirmed CORSIA as the sole global market-based-measure in support of aviation's decarbonization.
The following year governments agreed an interim target of a 5% emissions reduction by 2030 through SAF on international flights. We did not and do not support this interim target.
Our roadmap estimates that SAF will provide 65% of the carbon mitigation needed in 2050—aligned with almost all other decarbonization roadmaps. IATA's latest study confirms that, if we can accelerate the roll-out of production technologies, there is more than enough feedstock for the SAF we need.
So while SAF production will double to 2 million tonnes in 2025 it will only meet 0.7% of airline fuel needs. What's gone wrong?
- Despite their enthusiasm, governments did not create supportive policy frameworks to meet their 2030 interim target.
- US tax credits that boosted SAF production are now uncertain and globally, the companies we need to be major SAF players, such as BP and Shell, have cutback or delayed investment plans.
- Government support for CORSIA is weakening with many governments seeking to milk aviation for more taxes. The abolishing of an aviation tax in Sweden is a rare exception to a trend of governments inventing or hiking aviation taxes that includes the UK, France, Germany, the Netherlands, Gabon, Djibouti and others. And the EU is unrelenting in proposals to expand its regional scheme.
- The EU mandate to mix 2% SAF in the jet fuel supply raised costs but not production. It's an outrage that suppliers are charging airlines compliance fees that value SAF at double its market premium over conventional jet fuel. That's a billion-dollar windfall for fuel suppliers. This is the EU great green scam.
- The supply chain issues already discussed are raising the fleet age from 13 to 15 years and slowing progress on improving fuel efficiency. And Airbus has backed away from commitments to bring a hydrogen aircraft to market in the medium term.
This is not where we should be in 2025. We have a quarter century to get to net zero. There is no time for delay and no tolerance for government greenwashing and unnecessary cost increases. We need urgent actions:
- CORSIA must be successful. It is a credible and verifiable system that requires carbon credits of only the highest standard, making its positive impact on climate unquestionable. We're ready to help it succeed with IATA's Aviation Carbon Exchange permanently open to facilitate transactions. But, more governments need to join Guyana which, to date, is the only state to certify credits for airlines to purchase.
- These actions must be accompanied by ringing the alarm bells on SAF production. We need more effective leadership.
For governments, that means delivering policy actions and certainty, preferably production incentives, that have a track record of success. Novel policy measures are also welcome as well, provided they are assessed early and abandoned if they are not producing results.
Meanwhile companies that can produce SAF must stop procrastinating and get to work at ramping-up production capacity. We're playing our part with the recently launched CADO SAF Registry with its associated SAF accounting methodology, and the SAF Matchmaker should all boost progress by enabling a global SAF market that credibly traces SAF irrespective of where it is produced, purchased or used.
- And lastly, while I have emphasized SAF—where the biggest gains can be made—we must action all the other levers of decarbonization. In particular, ANSPs and airports must deliver greater efficiency. And aircraft and engine manufacturers must make good on their promises to bring greater efficiency and carbon-reducing technologies to market fast.
By the time we meet next year, we must be able to show more progress. And by "we", I mean all the aviation industry and governments who are joined in a common commitment to net zero by 2050.
I have always been skeptical referring to governments and supply chain participants as partners. But if there is one area where we should share a partnership, it's sustainability. Airlines can't make SAF, build aircraft, promulgate government policy or fix air traffic management. Decarbonization needs true and active partnership. Am I being cynical for wondering if other parts of the value chain are committed to net zero because they see it as an opportunity to generate additional profit?
If these comments cause alarm and trigger action, that is their intent. Good intentions will not get us to net zero. Action is what we need. Fortunately, it's not too late to pick up pace and re-align us on the path to success.
Wrapping-up
As I bring my remarks to a close, let's remember all those who are counting on that success. Our customers have told us they want flying to be even safer, more accessible and sustainable. Our association's first eight decades of working together put us on the right path and should give us great confidence in the future.
We turned flying from a luxury for a privileged few into a safe global mass transit network serving nearly five billion travelers a year. And billions more deserve the prosperity that aviation brings—with the places it makes possible to experience, the jobs it sustains, the trade it supports, the people it brings together and the dreams it fulfils.
Flying is freedom. And the human spirit thirsts for the exhilaration that freedom brings.
> Read the Airline Profitability Outlook press release
