Air transport industry poised for growth amidst profitability, safety, and sustainability challenges

June 2, 2025 in Business, Companies, Trade & Industry, Travel & Tourism by Editor

Uganda Airlines will operate a mix of A330neo’s for the long haul network and shorter range Bombardier CRJ’s for the regional feeder network

Michael Wakabi

The global airline industry is on track to carry over five billion passengers annually, underscoring the sector’s enduring strength and economic relevance, according to Willie Walsh, Director General of the International Air Transport Association (IATA).

Speaking at the 81st IATA Annual General Meeting (AGM) in New Delhi today, Walsh painted a picture of a resilient industry grappling with significant challenges — from infrastructure and regulation to sustainability — even as it continues to support nearly 87 million jobs and generate 3.9percent of global GDP.

In 2025, airlines are expected to post a combined profit of $36 billion on nearly $1 trillion in revenue, a modest 3.7percent margin that Walsh said belies the immense economic and social value aviation provides.

“That’s just $7.20 in net profit per passenger,” he noted. “Our profitability is not commensurate with the enormous value we create.”

Despite rising costs and taxation, the real cost of air travel has fallen percent over the past decade. Still, Walsh warned that poor aircraft production performance and slow infrastructure development risk constraining future growth.

Aircraft manufacturers have fallen behind drastically, with a backlog of 17,000 units and a delivery shortfall of 26percent for 2025 compared to earlier projections. “It’s just not acceptable,” said Walsh. “Real solutions must come from manufacturers. The only thing I can say is that solutions cannot come fast enough.”

On infrastructure, Walsh praised countries like India, Vietnam, Morocco, and the UAE for expanding airport capacity. But he singled out Europe for lagging behind, citing decades of inaction on the Single European Sky and what he called the “short-sighted madness” of plans to shrink Schiphol Airport in the Netherlands under the guise of noise control.

IATA also remains laser-focused on safety, Walsh said, citing seven fatal accidents in 2024 out of 40.6 million flights — a strong safety record for an industry that aspires to “zero accidents, zero fatalities.” But progress is being stalled by government inertia.

Less than half of the accident investigations in the past six years have yielded final reports, Walsh said — a failure that deprives the industry of lessons that could prevent future accidents. He called for renewed government accountability at the upcoming ICAO Assembly.

He also urged greater information sharing around conflict zones, citing two aircraft downed in such areas over the past year and rising interference with aviation systems. Two aircraft were downed in conflict zones last year – an Ilyushin Il-76T cargo plane in Sudan and an Azerbaijan Airlines flight in Grozny, Russia. The Il-76 was reportedly shot down by the Rapid Support Forces in Sudan, while the Azerbaijan Airlines flight was damaged by what are believed to be Russian surface-to-air missiles.

“Civil aviation must never be a target in military operations — not even inadvertently,” he stressed.

Walsh criticized what he described as “bad regulation,” particularly Europe’s EU261 law, which mandates compensation to passengers during delays — regardless of who is at fault. The regulation has cost airlines €5 billion annually without improving reliability. “It’s had no problem-solving benefit,” he said.

He expressed concern that countries like the US and Canada are moving to adopt similarly burdensome passenger rights laws, calling on regulators to instead prioritize cost-benefit analyses and structural reform.

Walsh called for adoption of digital identity (Digital ID) as a solution to improve travel efficiency and reduce costs. With trials already underway in various regions, he urged ICAO and governments to fast-track adoption and standardization of digital travel documents.

In cargo, the ONE Record initiative — a single, real-time data platform — is set for global rollout in 2026. Walsh encouraged governments and industry players to commit to its use, arguing that “better compliance, cost savings and faster processing” await those who embrace the new system.

Walsh expressed frustration about the state of sustainability efforts. Despite global commitments to net-zero emissions by 2050, the industry is far behind in scaling up Sustainable Aviation Fuel (SAF). Although SAF production is set to double in 2025 to 2 million tonnes, that will still account for less than 1percent of global airline fuel needs.

“There is no time for delay and no tolerance for government greenwashing,” said Walsh, urging concrete policy incentives and quicker investment by fuel producers. He called SAF suppliers’ current pricing practices — which have created windfall profits under the EU mandate — a “great green scam.”

He emphasized the importance of making the CORSIA carbon offset system work, and rolled out IATA’s new SAF Registry and Matchmaker tools to build a transparent global market.

Walsh closed his speech by reaffirming aviation’s unique role in global prosperity and connectivity. “Flying is freedom,” he said. “And the human spirit thirsts for the exhilaration that freedom brings.”

He urged all stakeholders — including governments, manufacturers, and suppliers — to rise to the challenge. “Good intentions will not get us to net zero. Action is what we need.”

As IATA marks 80 years since its founding, the industry is at a crossroads. Strong demand and technological potential offer a bright future — but only if key players align to address the bottlenecks and deliver meaningful change.

“Fortunately, it’s not too late to pick up pace and re-align us on the path to success,” Walsh concluded