Cost of Flying in Real Terms has Dropped by 40% in the Past Decade, Says IATA

Despite rising cost pressures and tax burdens, the real cost of flying has dropped by 40% over the past decade, even as global air travel is set to surpass 5 billion passengers annually, according to the International Air Transport Association (IATA).

The announcement came during the IATA Annual General Meeting, held in India for the first time in 42 years. Willie Walsh, Director General of IATA, outlined the progress and mounting hurdles facing the aviation industry, including supply chain constraints, underwhelming manufacturing outputs, and regulatory inefficiencies.

Industry Growth Amid Supply Chain Constraints

Representing more than 350 airlines worldwide, IATA projected global airline profits to reach USD 36 billion in 2025, on revenues of USD 979 billion, translating to a net profit margin of 3.7%, or about USD 7.20 profit per passenger.

However, Walsh warned that profitability remains inadequate when compared to the value airlines provide.

“Our profitability is not commensurate to the enormous value that we create at the heart of a value chain supporting 3.9% of global GDP and jobs for 86.5 million people,” he stated.

He highlighted that supply chain issues have slowed growth, particularly in aircraft manufacturing. A delivery backlog of 17,000 aircraft now implies a 14-year delay between order and delivery. Furthermore, aircraft deliveries for 2025 are expected to fall 26% short of last year’s projections.

Mounting Operational Pressures

More than 1,100 aircraft under 10 years of age remain in storage, representing 3.8% of the global fleet, nearly three times higher than the pre-pandemic level of 1.3%. The fleet replacement rate has dropped to 3% annually, well below the typical 5–6%.

“This hits revenues because some demand goes unmet. Scarcity also drives up maintenance and leasing costs,” Walsh cautioned. He urged aircraft manufacturers to resolve these bottlenecks swiftly, adding that delays extending to the end of the decade are unacceptable.

Regulatory and Geopolitical Concerns

Walsh also criticized inefficient regulatory practices, advocating for a rigorous cost-benefit analysis of new rules.

“Bad regulation can destroy value and stand in the way of affordability,” he said, stressing that regulators often lack accountability since they are not “playing with their own money.”

Geopolitical instability has also affected aviation safety and operations. Over the past year, two civil aircraft were downed in conflict zones, several airports were bombed, and interference with navigation systems near war zones has sharply increased.

Safety Oversight and Transparency

In a pointed observation, Walsh revealed that less than half of aviation accident investigations over the last six years have resulted in published final reports.

“Missing insights from accident reports are lost safety opportunities,” he remarked.

In 2024, the global aviation sector saw seven fatal accidents out of 40.6 million flights, resulting in 244 fatalities among 4.8 billion passengers.

India’s Aviation Market in Focus

India remains a crucial growth market, ranking among the fastest-growing civil aviation sectors globally. Passenger demand continues to climb, though rising airfares have raised concerns.

With the real cost of flying significantly lower than a decade ago, Walsh underscored the importance of efficient regulation, strong manufacturing performance, and geopolitical stability in ensuring affordable and sustainable air travel growth.

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