Global Airline Profits Expected to Fall Sharply in 2026 as Jet Fuel Prices Surge

Global airline profits are expected to decline significantly in 2026 as soaring jet fuel prices, driven by ongoing conflict in the Middle East, increase operating costs across the aviation industry, according to the latest forecast from the International Air Transport Association.

IATA, which represents approximately 370 airlines accounting for around 85 percent of global air traffic, said in its latest financial outlook that the industry's combined net profit is projected to reach $23 billion in 2026.

The revised forecast marks a substantial downgrade from the association's earlier estimate of $41 billion in net profit. It also represents a sharp decline from the $45 billion earned by airlines worldwide in 2025. As a result, industry profits could fall by nearly half compared with last year.

Despite the weaker profitability outlook, IATA expects global air travel demand to reach record levels this year. The organization forecasts that 5.1 billion passengers will travel by air worldwide in 2026, an increase of 2.4 percent compared with 2025.

IATA Director General Willie Walsh said that instability caused by conflicts in the Middle East and the continued rise in fuel prices have placed significant pressure on airline finances.

“The geopolitical uncertainty linked to the conflict in the Middle East, combined with rising fuel costs, has weakened the business environment for airlines,” Walsh said.

According to the report, airline operating expenses are also rising rapidly alongside passenger demand. Total industry operating costs are projected to increase by 13 percent from last year, reaching $1.12 trillion in 2026.

The primary driver behind the increase is fuel expenditure. Airlines spent approximately $252 billion on fuel in 2025. That figure is expected to surge by nearly 40 percent to $350 billion in 2026 as jet fuel prices continue to climb.

Industry analysts note that while strong passenger demand is helping airlines maintain revenue growth, rising fuel costs remain one of the sector's biggest challenges. Fuel is typically the largest single operating expense for most carriers, making profitability highly sensitive to fluctuations in global energy markets.

The latest forecast highlights the aviation industry's resilience in attracting record numbers of travelers, while also underscoring the financial pressures created by geopolitical tensions and volatile energy prices.