LONDON: The global airline industry is facing an estimated $100 billion increase in jet fuel costs this year following the escalation of conflict in Iran, which has driven energy prices sharply higher, according to the International Air Transport Association (IATA).
The industry body warned that rising fuel expenses are expected to significantly weaken profitability, with global airline net profits projected to fall from $43 billion in 2025 to $23 billion this year, while average profit margins are forecast to decline from 4.2% to 2%.
IATA Director-General Willie Walsh, former CEO of British Airways, said the sector is operating on “wafer-thin margins,” highlighting growing financial pressure across the aviation industry. He noted that conditions are particularly difficult for airlines still recovering from the financial impact of the COVID-19 pandemic.
The surge in fuel costs follows a sharp rise in global oil prices after the conflict triggered disruptions in energy markets, including tensions around the Strait of Hormuz—one of the world’s most critical oil transit routes. Jet fuel prices reportedly doubled during the initial phase of the crisis, before partially easing later in the year. However, IATA still expects average fuel costs to remain around 70% higher compared to earlier levels.
The financial strain has been compounded by operational inefficiencies, with airlines increasingly relying on older aircraft due to production delays from aircraft and engine manufacturers. Walsh said the global fleet’s average age has now exceeded 15 years, a record high, amid a backlog of around 18,000 aircraft orders.
He warned that older fleets are increasing fuel consumption, maintenance costs, and leasing expenses, resulting in an estimated $11 billion in additional fuel costs during 2025 alone.
Walsh urged aircraft and engine manufacturers to improve reliability and delivery timelines, saying continued failures in production would be “unacceptable” for the industry’s long-term stability.
Despite rising costs, passenger demand remains resilient. IATA reported that most travellers expect fares to move in line with oil prices, while nearly half anticipate higher travel spending this year.
Benchmark Brent crude oil prices surged to as high as $120 per barrel during the conflict, up from just over $70 at its onset, before later easing to around $93 per barrel.
