The world’s airlines expect to earn roughly half as much this year as they did last year, dragged down by a surge in jet fuel prices tied to the war with Iran. The International Air Transport Association, the industry’s main trade group, delivered the downgrade Sunday, June 7, at its annual meeting in Rio de Janeiro.
Airlines will bring in a combined net profit of $23 billion in 2026, down from a previously projected $41 billion and below the $45 billion they earned in 2025, the group said. Profit margins are expected to thin from 4.2% to 2.0%, meaning carriers will keep just two cents of every dollar in sales.
The cause is fuel. The group expects average jet fuel prices to run 70% higher than last year, adding about $100 billion to the industry’s collective fuel bill. Oil prices jumped after the U.S.-Iran conflict began in late February and disrupted shipping through the Strait of Hormuz, the chokepoint that handles a large share of the world’s oil. Jet fuel now averages around $152 a barrel, up from roughly $90 last year.
Willie Walsh, the group’s director general, said war-related disruptions and rising fuel costs have shifted the outlook for the worse. He warned that smaller carriers that started the year with weak finances are struggling the most.
The pain is uneven. The Middle East, long the most profitable region for air travel, has been hit hardest. The group now expects the region’s airlines to lose $4.3 billion this year, a sharp reversal from the $7.2 billion profit they earned in 2025, as carriers like Emirates and Qatar Airways cut operations following weeks of airspace closures. In North America, profits are forecast to fall to $9.4 billion from $12.4 billion.
Travel demand itself is holding up. Passenger numbers are expected to rise 2.4% to 5.1 billion this year, with planes filling to about 84% of capacity. The problem is that demand cannot outrun costs. Airlines are now earning just $4.50 in profit per passenger, a razor-thin cushion.
For travelers, the squeeze is showing up at the booking screen. Airlines are raising fares to cover the higher fuel bills, so summer trips cost more than they did a year ago. Some carriers, including LATAM and Azul, are cutting how often they fly certain routes. Others are flying longer paths to avoid closed airspace over the Middle East, which burns more fuel and adds time to journeys. Fewer flights and pricier tickets are the direct result.
Fuel is not the only headache. Airlines are also short on new planes. Airbus and Boeing have struggled with delivery delays, leaving carriers flying older, less fuel-efficient jets at exactly the moment fuel is most expensive. The aircraft backlog has swelled to record levels, capping how fast airlines can grow and adding to their costs.
The business stakes reach well beyond the airlines themselves. Air travel ties directly into tourism, conventions, and trade. When flying gets more expensive, families rethink vacations, companies trim travel budgets, and the hotels, restaurants, and shops that depend on visitors feel it. Shipping costs rise too, since a meaningful share of high-value goods moves by air.
The whole forecast rests on how long the war lasts. As long as the Strait of Hormuz stays disrupted, fuel will stay expensive and airlines will keep absorbing the hit or passing it to passengers. If the conflict eases and oil flows normalize, the math could improve quickly. Until then, the industry is bracing for a lean year, and travelers should expect to keep paying more to fly.
JBizNews Desk — Aviation
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