Understanding the IATA's Predictions on Airline Profitability in 2025 (And How Spare Parts Come Into the Mix)

The commercial airline sector is walking a tightrope in 2025, balancing improved profitability on paper with fragile structural underpinnings below the surface. While global airline profits are expected to increase, significant challenges remain, including worsening geopolitical conflict, trade wars, market demand, and aging fleets.

According to the IATA 2025 forecast, global airlines are projected to generate $36 billion in total net profits, a modest improvement over 2024 but still down from earlier projections made in late 2024.. Beneath the record forecast, margins are paper thin.

This article examines 12 key IATA predictions shaping global airline profitability in 2025 and how technology platforms like ePlaneAI can directly help airlines mitigate risks and optimize operations, even amid supply chain uncertainty.

IATA Prediction 1: Airline profits will reach $36 billion

The International Air Transport Association projects 2025 global airline net profits at $36 billion, up from $32.4 billion in 2024. But that’s still 1.6% below IATA’s December forecast of $36.6 billion, which reveals lingering vulnerabilities.

That $36 billion yields a 3.7% net margin. While it’s up slightly from 3.4% in 2024, it’s still a per passenger net of just $7.20. This leaves airlines dangerously exposed to any cost spike or other disruptions.

IATA’s Willie Walsh warns that even small tax hikes or minor demand dips could erode profits.

Operational challenge for airlines

With such thin margins, any maintenance delay can be catastrophic. Minor spare parts delays can sideline aircraft and chip away profits. Aging fleets and delivery delays force carriers to run older aircraft longer, compounding maintenance costs and operational risk as MRO shortages worsen.

Solution: Predictive tech helps airlines stabilize margins

Margins collapse fast when small disruptions stack up. ERP integrative solutions like ePlaneAI gives airlines real-time visibility into parts demand, maintenance timing, and supplier delays, helping carriers build inventory buffers and avoid preventable groundings.

IATA Prediction 2: Industry revenue will hit $979 billion

Heading into 2025, airlines were expected to finally break the $1 trillion revenue mark. Instead, IATA has revised that figure down to $979 billion, a 2.1% cut from its December forecast. Still, this reflects 1.3% growth over 2024’s $967 billion.

But even this record figure shows how fragile growth is. Consumer confidence is dropping as protectionism rises and global tensions persist. Global GDP growth will slow from 3.3% in 2024 to 2.5% in 2025, tightening the link between economic headwinds and airline financial performance.

Shifting composition of revenue streams

Total revenue is up, but its sources have fundamentally shifted. Passenger revenue is projected to reach $693 billion—an all-time high—with ancillary sales adding an additional $144 billion. Over 20% of airline revenue now comes from non-airfare fees like baggage fees, upgrades, in-flight purchases, and loyalty programs.

Meanwhile, base fares are dropping. The inflation-adjusted average return airfare for 2025 will be $374—40% below 2014 levels.. That puts more pressure on load factors and non-fare money streams to hold margins together.

Operational challenge for airlines

Rising costs threaten profitability. Labor, leasing, sustainability mandates, regulatory fees, and procurement costs keep climbing. With limited fare pricing power, airlines must squeeze ancillaries and manage fleets with extreme precision.

How predictive tech helps airlines unlock stalled revenue growth

Predictive platforms like ePlaneAI help airlines detect supply chain risks before they disrupt schedules. Early visibility into potential stockroom shortages lets carriers protect key routes, shift aircraft, and capture dollars that would otherwise vanish.

IATA Prediction 3: Passenger volumes will hit 5 billion

Passenger traffic keeps climbing, but growth is slowing from post-pandemic highs. In 2025, global passengers are projected to reach 4.99 billion, up 4% from 2024. This narrowly misses IATA’s earlier 5.22 billion forecast.

Revenue Passenger Kilometers (RPK) will rise 5.8% in 2025, returning to more sustainable mid-single-digit growth after the pandemic rebound.

Travel sentiment remains strong: In April 2025, 40% of travelers expected to fly more in the next year, while 53% expected to fly about the same.

Operational stress points

Strong demand creates serious strain as fleet availability remains tight. Groundings, labor shortages, and parts delays have pushed average carrier age to 15 years, up from 13 in 2015. Over 1,100 aircraft under 10 years old are grounded, many for engine or parts failures.

Airports, airspace, and air traffic control are also hitting capacity limits, especially in Europe and North America.

Capacity shortages

Unlike past cycles, airlines can’t easily add capacity through orders or leases. The global backlog exceeds 17,000 aircraft, with wait times now averaging 14 years. When demand outpaces available aircraft, revenue opportunities evaporate, and customer frustration grows.

Predictive tech helps airlines manage constrained growth

Available aircraft cannot meet market demand. Predictive platforms like ePlaneAI let airlines forecast where fleet shortages may emerge due to MRO delays. Early insights help carriers shift resources, prioritize high-profit routes, and prevent last-minute cancellations.

IATA Prediction 4: Air cargo stagnates under trade tensions

While passenger traffic surges, air cargo growth has stalled. IATA projects 69 million tonnes of cargo in 2025—up just 0.6% from 2024, far below last year’s 11.3% growth. Earlier forecasts of 72.5 million tonnes have been downgraded due to slowing GDP and rising trade protectionism.

Cargo revenues are forecast to fall 4.7% to $142 billion as yields soften alongside weaker demand and lower fuel prices.

Geopolitical headwinds

Trade tensions, tariffs, and fragmented policies continue battering cargo flows. U.S.-China tariff battles are reducing trans-Pacific volumes, while conflicts like the Russia-Ukraine war force costly reroutes.

Operational challenge for airlines

With yields falling, belly cargo utilization grows more important. But when widebody aircraft are grounded due to parts shortages, that added cargo capacity disappears. Each grounded aircraft removes dozens of tons per flight. Freight operations also face broader supply chain instability, from handling to ground logistics and shipments.

Predictive tech helps stabilize cargo economics

With cargo growth flat, widebody availability becomes critical. Predictive platforms like ePlaneAI let airlines forecast how shortages will affect freighter capacity months ahead. Seeing which aircraft face downtime allows airlines to proactively protect cargo lanes and shift capacity before disruptions hit bottom lines.

IATA Prediction 5: Fuel prices fall but volatility remains

Jet fuel offers rare relief in 2025. IATA projects an average price of $86 per barrel, down from $99 in 2024. This lowers the global fuel bill to $236 billion, or 25.8% of total operating costs, down from 28.9% one year prior. Minimal hedging means airlines are benefiting directly, boosting 2025 profitability.

Fragility beneath the good news

This fuel relief remains fragile. IATA flags multiple risks that could reverse declines:

Even modest swings have a major impact. A $10 per-barrel increase, for example, could erase billions in profit.

Operational challenge for airlines

Falling fuel prices risk masking rising costs elsewhere, such as labor or spare parts. Carriers ignoring underlying inefficiencies while fuel is cheap may be dangerously exposed when prices rebound. Fuel costs also dictate fleet planning and route economics, particularly as older, fuel-hungry aircraft are kept in service longer.

How predictive tech helps airlines de-risk fuel volatility

Fuel prices may be low now, but price spikes always return. Predictive tools like ePlaneAI model how fuel costs intersect with fleet aging, maintenance delays, and parts shortages. This helps airlines identify early where cost collisions could hit margins, allowing time to adjust.

IATA Prediction 6: SAF compliance costs surge while supply lags

Sustainable Aviation Fuel (SAF) remains key to Net Zero 2050 targets, but supply lags badly behind demand. IATA reports:

Despite strong industry efforts, volumes remain far below what’s needed for meaningful carbon cuts.

Systemic risk of regulatory acceleration

Europe leads with aggressive SAF blend mandates starting 2025–2027. Noncompliance penalties loom, while suppliers add “compliance fees” to hedge production risks. Without a production surge, airlines face spiraling compliance costs.

SAF mandates bring heavy operational complexity. Airlines must:

Worse, many SAF suppliers share the same suppliers, fabricators, and chemical processors already burdening aircraft component production, linking both supply chains tightly.

Predictive tech helps airlines navigate SAF compliance complexity

Sustainable fuel mandates add unpredictable cost pressure. Predictive platforms like ePlaneAI give airlines early visibility into SAF supply risks, supplier reliability, and regulatory shifts, well before new rules increase costs.

IATA Prediction 7: Aircraft backlogs top 17,000

Airlines face a historic aircraft delivery logjam. IATA reports a global backlog of 17,000+ aircraft, up sharply from 10,000–11,000 pre-pandemic. The average wait for new deliveries now stretches 14 years.

Short-term production is also falling short. IATA projects 1,692 deliveries for 2025, the industry’s highest output since 2018, but still 26% below earlier expectations.

Bottlenecks driving the crisis

Multiple failures continue paralyzing production:

These bottlenecks prevent airlines from replacing aging fleets, adding capacity, or retiring inefficient aircraft.

Willie Walsh offers a bleak take. "Manufacturers continue to let their airline customers down... indications that it could take until the end of the decade to fix them are off-the-chart unacceptable.”

Downstream financial impacts

Each delayed delivery means:

Ultimately, delivery delays deepen dependence on spare parts as their supply chains falter.

Predictive tech helps airlines navigate delivery shortfalls

Delivery delays slow growth and reshape fleet strategy. ePlaneAI helps airlines forecast how long backlogs will last and model impacts on maintenance, spare parts, and leasing needs. With better foresight, airlines can stabilize operations even as new aircraft remain stuck in limbo.

IATA Prediction 8: Engine reliability issues ground hundreds of newer aircraft

While delivery delays dominate attention, engine maintenance failures are quietly gutting profitability. In 2025, IATA reports that over 1,100 aircraft under 10 years old are grounded, primarily due to engine failures, especially in the PW1000G geared turbofan family (IATA, June 2025).

This represents 3.8% of the global fleet—triple the 1.3% grounding rate seen between 2015 and 2018. Critically, these grounded planes are narrowbody planes that airlines were counting on to cut fuel burn and meet emission goals.

Mechanical root cause

Durability failures inside next-gen turbofans include:

With limited capacity, even isolated design flaws snowball into widespread groundings as repair shops struggle to keep pace.

Spare parts death spiral

Every grounded engine drains high-demand inventory items:

Parts pools are depleting fast. For some components, lead times exceed 18–24 months, leaving airlines with no near-term recovery options.

Predictive tech helps airlines minimize grounded fleet risk

When such shortages hit, groundings escalate fast and often unevenly. ePlaneAI helps airlines identify which fleets and engine variants face the highest exposure before failures multiply. Early visibility allows operators to shift parts, prioritize high-yield aircraft, and prevent widespread disruption.

IATA Prediction 9: Labor costs surge as airlines face skilled workforce shortages

While fuel costs drop, labor expenses are rising fast. IATA projects airline labor costs will reach $253 billion in 2025, up 7.6% over 2024. Yet workforce growth will rise only 4%, hitting 3.3 million globally.

The tightest shortages hit:

These gaps drive wage inflation across North America, Europe, and Asia-Pacific.

Structural labor crisis

Years of underinvestment collide with pandemic attrition. Key drivers include:

Even as hiring ramps up, certified technicians can’t keep up, just as delayed aircraft deliveries and parts shortages drive workloads even higher.

The compounding problem: Maintenance backlogs

Labor gaps directly worsen parts-related downtime. Without enough certified staff, fleet experience growing delays in:

MRO backlogs stretch dangerously as demand peaks.

Predictive tech helps airlines navigate labor-driven disruptions

Parts can be stockpiled, but labor can't. Predictive platforms like ePlaneAI forecast where technician or pilot shortages could choke operations. This foresight lets airlines adjust schedules, shift workloads, and prioritize training.

IATA Prediction 10: Trade tensions, protectionism, and geopolitical risk cast a long shadow

Politics are becoming the biggest threat to 2025 profitability. IATA warns that trade tensions and protectionist policies are already dragging down cargo volumes and business travel, especially as the U.S. revives aggressive tariffs. Global GDP growth is projected to slow from 3.3% in 2024 to 2.5% in 2025, tightening both cargo and passenger revenue.

Operational flashpoints

Spare parts and maintenance fallout

Geopolitics are embedded in the spare parts ecosystem that airlines rely on. Fragmentation directly disrupts supply chains by:

Predictive tech helps airlines de-risk global political instability

Predictive platforms like ePlaneAI map supplier exposure to geopolitical hotspots and model how fast currency or policy shifts could inflate costs. Early intelligence lets airlines hedge, reroute, or stockpile, minimizing financial loss and strengthening operational continuity.

IATA Prediction 11: Regional profitability gaps continue to widen

While all regions should post profits in 2025, performance results differ sharply:

Drivers behind the divergence

The spare parts penalty

Regions lacking domestic parts and MRO capacity face sharp disadvantages:

Predictive tech helps airlines mitigate regional disadvantage

In many regions, logistics is a bigger problem than soft demand. Predictive platforms like ePlaneAI help airlines forecast where customs delays, currency moves, or parts shortages will hit hardest. Early insights let carriers shift sourcing, reposition inventory, and rebalance fleets to stay flying amid geopolitical barriers.

IATA Prediction 12: Spare parts scarcity drives airline resilience

Spare parts have shifted from routine procurement to the primary determinant of airline profitability, competitiveness, and capacity.

Across every challenge—fuel volatility, grounded fleets, labor shortages, geopolitics, SAF mandates, and trade fragmentation—access to parts remains the common choke point:

Even airlines flush with passenger demand and record load factors can’t convert sales into profitability when aircraft idle awaiting parts.

Unlike past cycles driven by fuel prices or demand, 2025 profitability hinges on uptime. A fully booked schedule means little if aircraft aren’t airworthy. Each grounding triggers cascading costs like penalties, crew displacements, stranded assets, and reputational damage.

This exposure is now driving board-level interest in inventory management for operational continuity.

How ePlaneAI uniquely positions airlines for this parts-driven era

ePlaneAI helps airlines thrive amid uncertainty. We arm fleets with the data modeling capabilities they need to meet IATA 2025 challenges and other industry threats.

Our powerful, hyper-advanced tools let you complete fleet uptime simulation, modeling part riks, maintenance, supplier deliverability confidence, and provide real-time readiness visibility dashboards and reports.

ePlaneAI’s dynamic sourcing playbooks can instantly generate alternate procurement scenarios for any critical part, ranked by cost, regulatory feasibility, legal acceptance, lead time, and vendor reputation.

Additionally, ePlaneAI drives regulatory compliance modeling and capital allocation forecasting. Companies leveraging ePlaneAI can confidently meet SAF mandates, ensure ongoing operational compliance, and strategically rebalance capital for new purchases while optimizing procurement decisions.

In 2025, success isn’t about who sells the most seats, it’s about managing inventory and labor shortages in an increasingly tense political theatre. Global business operations will always bring challenges, but companies with the best real-time data, insights, and scenario modeling will have an insurmountable edge.

Book a demo today to see how ePlane can help you scale your 2025 profitability.