IATA Warns Global Airline Profits to Halve in 2026 as Jet Fuel Costs Surge 70% Amid West Asia Conflict

"The sharp 70 percent increase in jet fuel prices is impacting the profitability of all airlines," Walsh said. "Some of the additional costs are being recovered through fare adjustments and increased operational efficiency, but this will not be sufficient to maintain last year's level of profitability."

Despite the decline in profits, the airline industry's total revenue is projected to reach a record $1.165 trillion in 2026, a 9.4 percent increase from $1.065 trillion in 2025. Passenger numbers are projected to increase 2.4 percent to 5.1 billion, with a record occupancy of 84 percent of available seats.

Passenger ticket revenue is projected to reach $839 billion. Ticket yields are projected to increase by 7 percent as airlines increase fares to partially offset the fuel cost shock.

However, IATA warned that operating expenses will rise faster than revenue. Total industry costs could rise 13 percent to $1.117 trillion. Fuel expenses, the largest contributor, are projected to rise nearly 40 percent to $350 billion.

The organization said the airline industry has already been operating on low profit margins, so this situation poses additional challenges. "Airlines are bearing the brunt of the fuel price shock," Walsh said.

He added, "Net profit per passenger is projected to fall to $4.50, half of last year's figure. This reflects the industry's resilience under current circumstances. But this figure isn't enough to buy a hot dog at most FIFA World Cup hosting sites and offers little protection if other costs or taxes rise."

Regionally, IATA said all major airline markets, except West Asia, are expected to remain profitable. Airlines in West Asia could face losses due to flight disruptions, airspace restrictions, and reduced transit traffic caused by the conflict.

"Airlines in the Gulf region have faced operational uncertainties, including near-complete airspace closures since the war began," Walsh said. "These airlines are doing a great job maintaining connectivity, but the financial impact is unavoidable."

IATA also identified slower global economic growth, rising inflation, disruptions to the aircraft supply chain, and geopolitical uncertainties as key risks facing the airline industry in 2026.