Despite record-breaking passenger numbers and revenues in 2025, the aviation industry faces significant challenges, including geopolitical instability, rising fuel costs, labour shortages and supply chain disruptions. Navigating these hurdles will be crucial for sustaining growth and long-term resilience.

The global aviation industry is set to achieve historic milestones in 2025, yet it faces a range of formidable challenges. With passenger traffic projected to surpass 5.2 billion and industry revenues expected to exceed $1 trillion for the first time, the sector is experiencing a strong post-pandemic recovery.

In this article, we explore the challenges and opportunities for the industry in 2025.

Challenges in the aviation industry in 2025

Economic growth amid uncertainty

For the first time in history, the aviation industry is projected to cross the $1 trillion revenue mark – a 4.4 percent increase from the previous year. While this milestone highlights the industry's resilience, economic uncertainty remains a critical challenge.

Revenue vs costs: According to the International Air Transport Association (IATA), airlines are on track to generate a net profit of $36.6 billion in 2025, up from $31.5 billion in 2024. This growth is fuelled by increasing leisure travel, expanding business connections and a thriving international tourism market. However, total industry costs are expected to increase by 4.0 percent to $940 billion, resulting in an operating profit of $67.5 billion – a net operating margin of 6.7 percent.
Inflation and operational expenses: Rising costs – including labour, maintenance and fuel – continue to pressure airlines, requiring stringent cost-management strategies to maintain profitability.
Fluctuating fuel prices: Despite a projected decrease in jet fuel prices to $87 per barrel in 2025 from $99 per barrel in 2024, volatility in fuel markets poses ongoing financial risks.

“In 2025, industry revenues will exceed $1 trillion for the first time. It’s also important to put that into perspective. A trillion dollars is a lot – almost 1 percent of the global economy. That makes airlines a strategically important industry. But remember that airlines carry $940 billion in costs, not to mention interest and taxes. They retain a net profit margin of just 3.6 percent. Put another way, the buffer between profit and loss, even in the good year that we are expecting in 2025, is just $7 per passenger,” commented Willie Walsh, IATA’s Director General when the association announced the expectations for 2025.

Jet fuel prices and their impact

Jet fuel remains one of the most significant cost variables for airlines, comprising up to 30-40 percent of total operating expenses. Geopolitical tensions, supply chain constraints, refining capacity limitations and global oil market dynamics drive price fluctuations. Conflicts such as the Russia-Ukraine War and instability in the Middle East continue to disrupt fuel supplies, leading to increased price volatility.

Jet fuel price outlook for 2025: After briefly dropping to $70 per barrel in late 2024, jet fuel is expected to average $87 per barrel, down from $99 per barrel in 2024. While this represents some relief, fuel costs remain a critical challenge for airlines managing tight margins.
Ageing fleets and efficiency concerns: The global fleet's average age has reached 14.8 years – the highest on record. Older aircraft consume more fuel and generate higher emissions, increasing costs and environmental impact.
Sustainable Aviation Fuel (SAF): SAF adoption remains slow due to high costs and limited supply, making it an inadequate short-term solution to fuel price volatility.

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Challenges and opportunities for the aviation industry in 2025