Airline profits around the globe are set to take a major hit in 2026 due to the rising cost of jet fuel, according to a new report.
Higher fuel prices due to the war in Iran will add a collective $100 billion to airlines’ fuel bills in 2026, says the International Air Transport Association (IATA).
The industry group expects jet fuel prices to remain 70% higher year-over-year due to the war in Iran.
Amid the added costs for carriers, profits are expected to significantly shrink across the industry: IATA predicts that 2026 profitability will be cut in half compared to 2025.
“Net profits will fall from $45 billion to $23 billion in 2026, and net margins from 4.2% to 2.0%,” IATA’s president Willie Walsh said in the group’s annual Report on the State of the Global Air Transport Industry.
One bright spot is the fact that travelers appear able to absorb higher booking costs, at least for the time being. IATA’s data shows that 86% of travelers expect fares to track oil prices.
“The positive however, is that demand is holding up, even as airlines are raising fares and rates to cope,” Walsh said.
But even that resiliency will have an eventual breaking point, with experts unsure of how long travelers can keep up with rising prices.
“The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity,” Walsh said.
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