Airlines Face Thin Margins in 2026 as Asia-Pacific Drives Global Growth

International travel in the region jumped nearly 11%, underscoring the region’s central role in aviation’s post-pandemic recovery.

The global airline industry is set for another year of solid traffic growth in 2026, led by the Asia-Pacific region, but profitability will remain fragile amid persistent supply-chain disruptions and mounting environmental costs, industry leaders warned at the Changi Aviation Summit in Singapore.

Speaking to ministers, aviation executives and policymakers, industry leaders said 2025 marked a strong recovery year following the COVID crisis, with global passenger traffic rising 5.3% and cargo demand exceeding expectations. International passenger traffic grew by 7.1%, while domestic traffic increased by 2.5%, accounting for more than a third of global passenger kilometers.

Air cargo grew by 3.4% in 2025—outperforming forecasts—but revealed clear geopolitical fault lines. Cargo volumes between Asia and North America declined by 0.8% for the first time in years, while Europe–Asia traffic surged by more than 10%, highlighting shifting trade patterns.

Asia-Pacific leads the recovery

The Asia-Pacific region emerged as the global growth engine, with passenger traffic rising 7.8% in 2025 and cargo up 8.4%. International travel in the region jumped nearly 11%, underscoring the region’s central role in aviation’s post-pandemic recovery.

Looking ahead to 2026, global passenger traffic is forecast to grow by 4.9%, with cargo up 2.4%. Asia-Pacific is expected to outperform again, contributing passenger growth of more than 7% and cargo growth of 6%.

Profits remain under pressure

Despite rising demand, airlines continue to operate on razor-thin margins. Global net profits are forecast at just under USD 40 billion in 2025, increasing slightly to USD 41 billion in 2026—equivalent to a net margin of just 3.9%. Net profit per passenger remains a modest USD 7.9.

In Asia-Pacific, profitability is even tighter, with net margins estimated at 2.3% and average profit per passenger of just over USD 3.

“For context, the most profitable year in aviation history delivered a net margin of 5%,” industry leaders noted. “Today’s margins leave little room for shocks.”

Supply chains and sustainability dominate concerns

Two structural challenges continue to weigh heavily on the industry. Ongoing aircraft delivery delays have left airlines operating fleets that are, on average, two years older than normal, driving higher fuel and maintenance costs. A recent industry report estimates supply-chain disruptions have added more than USD 11 billion in costs, with no quick resolution in sight.

At the same time, airlines are under growing pressure to decarbonize. While governments have aligned on a long-term goal of net-zero emissions by 2050, progress on sustainable aviation fuel (SAF) remains slow. SAF production reached just 1.9 million tonnes in 2025—only 0.6% of total jet fuel demand—with high prices and uneven mandates discouraging wider uptake.

By contrast, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is expected to generate up to USD 60 billion in climate finance by 2035, underscoring its importance as the industry’s primary global market-based climate mechanism.

Call to action: align growth with policy and fuel supply

Industry leaders urged governments to prioritize supply-chain resilience, support CORSIA as a single global framework, and accelerate SAF production through incentives rather than fragmented mandates. Early policy alignment and investment, they said, will be critical to sustaining growth while meeting climate goals.

As global demand continues to rise, the message from Singapore was clear: aviation’s recovery is real—but its future depends on decisive action now.