ÿÈÕ´óÈü

KUALA LUMPUR: Global airlines are expected to post a combined net profit of RM168 billion (US$41 billion) in 2026 marking a new industry record as revenues rise above the RM4 trillion (US$1 trillion) threshold, according to the latest global outlook by the International Air Transport Association (IATA).

The airline trade association said the forecast represents an improvement from the RM161 billion (US$39.5 billion) profit expected in 2025, reflecting airlines' ability to navigate a changing and increasingly complex operating environment.

"Airlines are expected to generate a 3.9 per cent net margin and US$41 billion profit in 2026.

"That's extremely welcome news considering the headwinds that the industry faces – rising costs from bottlenecks in the aerospace supply chain, geopolitical conflict, sluggish global trade, and growing regulatory burdens among them.

"Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability," IATA director general Willie Walsh said in a statement.

However, IATA cautioned that the airline industry as a whole does not earn enough to cover its cost of capital.

On a per-passenger basis, airlines are expected to earn RM32 (US$7.90) for every traveller carried, flat year-on-year and below the 2023 high of RM35 (US$8.50).

IATA said for an industry that transports billions of passengers annually, the figure underscores how thin financial buffer remains leaving airlines vulnerable to fuel price swings, geopolitical shocks and supply chain disruptions.

"Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies.

"They stand at the core of a value chain that underpins nearly four per cent of the global economy and supports 87 million jobs. Yet Apple will earn more by selling iPhone cover than the US$7.90 airlines will make transporting the average passenger," Walsh said.

Total industry revenues are forecast to reach RM4.3 trillion (US$1.053 trillion) in 2026, up 4.5 per cent from the RM4.1 trillion (US$1.008 trillion) expected in 2025.

IATA said passenger ticket revenues will continue to anchor the revenue base rising to RM3.1 trillion (US$751 billion), a 4.8 per cent increase from RM2.9 trillion (US$716 billion) in 2025.

"This growth will be primarily driven by a 4.9 per cent expansion of industry-wide revenue passenger kilometres (RPK) expected in 2026.

"Yields are expected to remain relatively flat while the passenger load factor is expected to set a new record at 83.8 per cent as new aircraft remain in short supply," IATA said.

Ancillary and other revenues are forecast to grow faster than ticket income, increasing by 5.5 per cent to reach RM593 billion (US$145 billion) in 2026.

Cargo revenues are expected to reach RM646 billion (US$158 billion) in 2026, up 2.1 per cent from RM634 billion (US$155 billion) in 2025.

IATA said growth will be supported by continued demand for time-sensitive shipments and e-commerce with cargo tonne kilometres (CTK) forecast to expand by 2.6 per cent, slightly slower than the 3.1 per cent growth anticipated in 2025.

"Coupling these factors with tightening capacity, cargo yields are expected to remain stable and elevated (about 30 per cent above pre-pandemic levels) despite a broader slowdown in global trade," IATA said.

On the cost side, IATA said the 2026 outlook points to a more balanced environment. Lower fuel prices are expected to provide some relief.

But this will be offset by rising non-fuel costs, including labour, maintenance, repair and overhaul and airport-related charges.

Sustainable aviation fuel (SAF) remains a significant challenge in the outlook. In 2025, SAF production is expected to reach 1.9 million tonnes or 2.4 billion litres, doubling the one million tonnes produced in 2024.

However, IATA said production growth is projected to slow in 2026 reaching 2.4 million tonnes. It added that even at these levels, SAF will account for only 0.6 per cent of total jet fuel consumption in 2025, rising marginally to 0.8 per cent in 2026.

IATA also said that at current prices, SAF premium is estimated to add RM14.7 billion (US$3.6 billion) to the industry's fuel bill in 2025.

It also revised its 2025 SAF production forecast downward citing insufficient policy support to fully utilise installed production capacity.

SAF prices currently exceed conventional jet fuel by about two times and by up to five times in mandated markets, IATA said.

"SAF production growth fell short of expectations as poorly designed mandates stalled momentum in the fledging SAF industry."

"If the goal of SAF mandates was to slow progress and increase prices, policymakers knocked it out of the park.

"But if the objective is to increase SAF production to further the decarbonisation of aviation, then they need to learn from failure and work with the airline industry to design incentives that will work," Walsh said.

IATA's regional breakdown shows that the Asia Pacific market will continue to be a key engine of global aviation growth in 2026.

Airlines in the region are projected to achieved a combined net profit of around RM27 billion US$6.6 billion, maintaining a net margin of some 2.3 per cent and earning about RM13.10 (US$3.20) per passenger.

Passenger demand in Asia Pacific is expected to grow by about 7.3 per cent in 2026 outpacing global growth and load factors in the region are forecast to reach around 8.4 per cent, an all-time high as rising tourism from China and India, eased travel restrictions and expanding middle-class travel underpin demand.

"Overcapacity remains a challenge and slow recovery in international traffic putting pressure on yields. Deflationary pressures are also driving yields lower in China," IATA said.