Excellencies, distinguished Ministers, honorable guests, ladies and gentlemen:
It is a great pleasure to be in Singapore once again for the Changi Aviation Summit. 2025 was a good year for the airline industry, although I think it's fair to say that every year looks good after the dreadful experience of going through the COVID crisis. Passenger traffic grew by 5.3% with international traffic measured in revenue passenger kilometers growing by 7.1% and domestic traffic up 2.5%. Domestic traffic is about 37% of global revenue passenger kilometers.
Cargo grew by 3.4% which was significantly stronger than our early forecasts for the year. And I think the impact of geopolitical change was much more obvious on the air cargo side of the business than on the passenger side. And just looking at the major air cargo trade lanes, Asia to North America and Asia to Europe which combined represent more than 50% of air cargo volumes, we saw a significant reduction in cargo between Asia and North America, down by 0.8%. It is the first time we've seen a decline in demand on that market for some considerable time. But at the same time, cargo volumes between Europe and Asia increased by 10.3%. The Asia-Pacific region led the way in terms of passenger growth, with passenger growth of 7.8%, very strong international growth of 10.9% and domestic growth of 4.6% while cargo also grew strongly in the region at 8.4%.
Now turning to 2026, we're forecasting that passenger traffic will increase by 4.9% and cargo by 2.4%. And while these are slightly lower than the growth we witnessed in 2025, they still represent a significant advantage for the airline industry. And again, the Asia-Pacific region will lead the way, making the strongest contribution to passenger growth, expected to be up by about 7.3% while cargo traffic is expected to grow by 6%.
Profitability still represents a major challenge for our industry. For 2025 we forecast that profitability would just be shy of USD 40 billion, representing a net margin of 3.9%. And for 2026 we see an increase in net profitability to USD 41 billion. But that still represents a wafer-thin net margin of 3.9% or an operating margin of 6.9%.
For context, the best year the airline industry ever saw in terms of profitability was in 2015 when we delivered an operating margin of 8.3% and a net margin of 5.0%. So this will continue to be a significant challenge for our industry as we go through 2026. Net profit per passenger in 2025 and in 2026 is a meager USD 7.9 per passenger.
If I look at the Asia-Pacific region, we estimate that the operating margin will be just shy of 5% while net margin in the region will be 2.3%. Significantly lower than the average for the rest of the world, with the average per passenger profit of just over USD 3.
Now there are many issues impacting on the industry this year and going forward, and many of those will be discussed in the panel later on today, but I would just like to highlight two issues.
The first is the disruption to the supply chain that we've witnessed. Since the recovery from COVID, regrettably, this disruption continues to have a major impact. We commissioned a report last year which estimated that the additional cost borne by the airline industry was over USD 11 billion, with two thirds of that coming from additional fuel costs and maintenance costs, as the industry is operating a fleet that is, on average, two years older than the long term average because of the delays in the delivery of new aircraft. Regrettably, we see this disruption continuing for some time to come.
And the second issue is our efforts to address the environmental footprint of our industry, which continues to be a major focus of all airlines. I would like to commend the work done by ICAO in this region, where they have been able to successfully harness the ambition of governments all around the world to align on a long-term ambition of achieving net zero by 2050. I think it's incumbent on all of us to continue to support CORSIA as the single market-based carbon offsetting mechanism to address CO2 from international aviation.
We estimate based on current prices for eligible units under CORSIA, the airline industry will face additional costs of about USD 60 billion up to 2035 to comply with our obligations under CORSIA. So it's important to recognize that there is significant finances available for the world through the CORSIA agreement, and we believe that governments should continue to support this initiative and take advantage of the opportunities that can be provided through this additional financing.
Unfortunately, we're not making sufficient progress on sustainable aviation fuel (SAF). SAF output reached 1.9 million tons in 2025, representing just 0.6% of total jet fuel consumption. And this is a downward revision from our earlier estimates. Unfortunately, planned production has faltered. Mandates have pushed prices higher, which have just discouraged voluntary demand and reduced output. SAF prices exceed fossil-based jet prices by a factor of more than two, while the evidence shows that in markets with mandates, that factor can increase to four times.
Now I look forward to participating in the debate later on today and in the panel discussions. I want to thank again the organizers of this excellent Summit, and wish you all a successful and enjoyable debate for the rest of the day.
Thank you.
