CHALLENGING MARKET CONDITIONS ACROSS ASIA
Geopolitical issues, trade tensions and economic uncertainty are clouding the overall outlook for the global aviation industry. Airline profitability remains low, making the industry vulnerable to shocks.
IATA expects airlines will generate US$36 billion in profits on US$979 billion in revenues in 2025, which equates to only a 3.7 per cent net margin or a profit of just US$7.20 per passenger. In 2024, the net profit margin was 3.4 per cent despite relatively buoyant demand and significantly higher air fares compared to pre-COVID levels.
In Asia, market conditions remain challenging, despite the growth expectations. Asia Pacific carriers are expected to only account for US$4.9 billion or 13.6 per cent of the global profits this year. This equates to a net margin of less than 2 per cent.
When excluding a handful of highly profitable airlines, the industry in this region is collectively only breaking even. Competition is intense and yields or air fares on many regional routes are not sufficient to cover higher costs.
Some markets have still not yet fully recovered from the pandemic. Several airlines in Asia are now in a precarious financial position and will likely need to restructure to survive.
India’s market is exceptional in that it is significantly larger than pre-COVID levels and continues to grow rapidly, but only IndiGo is profitable. Other airlines are unprofitable from several longstanding issues including high taxation and excessive regulation.
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