Airline profit margins seen to level off in 2026

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December 15, 2025 | 12:00am

MANILA, Philippines — Airlines are expected to book a record $41 billion in combined profit next year, but individually, margins are projected to stay the same, with net income per passenger falling below the previous high.

In a forecast, the International Air Transport Association (IATA) said the airline industry’s profit would likely grow by four percent to $41 billion in 2026, from $39.5 billion this year.

Although this will set a new record for the industry, the profit margin of airlines would remain at 3.9 percent, unchanged from 2025’s rate.

IATA expects profit per passenger transported to stay at $7.9, similar to this year’s level. This is still far from the 2023 high of $8.5, as airlines contend with several challenges like geopolitical conflicts and supply crunch.

IATA director general Willie Walsh said airlines would manage to keep margins at the same level by leaning on the growth of air travel. Likewise, they have built operational resilience to put up with extreme shocks in worst case scenarios.

“This is extremely welcome news considering the headwinds that the industry faces – rising cost from bottlenecks in the aerospace supply chain, geopolitical conflicts, sluggish global trade and the growing regulatory burden among them,” Walsh said.

“Airlines have successfully built shock-absorbing resilience into their business that is delivering them stable profitability,” he added.

At this level, Walsh said tech giant Apple earns more from selling an iPhone cover than a carrier moving people and goods and generating economic value in the process.

“Industry-level margins are a pittance considering the value airlines create by connecting people and economies. They stand at the core of a value chain that underpins nearly four percent of the global economy and supports 87 million jobs,” Walsh said.

As such, Walsh hopes that policymakers rebalance the profit chain by helping airlines earn more. He said carriers right now largely want reduction in regulatory and tax burdens and the delivery of new airport infrastructure.

In the Philippines, the country’s largest carriers Cebu Pacific and Philippine Airlines (PAL) are in a strong position to close the year in the black, lifted by fleet and network expansion.

As of September, Cebu Pacific has generated a profit of P9.46 billion, up by nearly thrice from a year ago’s P3.37 billion, while PAL’s net income has gone up by a third to P9.03 billion.