Apple probably earns more selling an iPhone cover than airlines will make transporting the average passenger. With this comparison, the International Air Transport Association (Iata) announced its latest financial outlook for the airline industry on Tuesday. The outlook indicates that the airline industry collectively does not generate earnings that cover its cost of capital; this remains an important issue to resolve.
Average real return airfares in 2025 dollars were 34.7% cheaper than 2015 and Iata expects competition to lead to average return airfares in 2026 being 36.8% below the 2015 level. “They stand at the core of a value chain that underpins nearly 4% of the global economy and supports 87-million jobs. Yet Apple will earn more selling an iPhone cover than the $7.90 airlines will make transporting the average passenger.
“Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies,” Iata director general Willie Walsh said in a statement. “And even within the air transport value chain, airline margins are totally out of balance, particularly when compared to margins of engine and avionics manufacturers and many of our service suppliers.” Walsh said airlines can bring additional power to economies if the value-chain profitability is rebalanced, regulatory and tax burdens are reduced, and infrastructure inefficiencies are addressed. Iata estimates that the profit per passenger of the airline industry in 2025 will be $7.90 and the net profit margin 3.9%.
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For African airlines, however, the estimate is profit per passenger of $1.40 and a net profit margin of 1.1%. Low GDP per capita across much of Africa limits discretionary spending, making air travel highly price sensitive and restricting its growth potential, according to Iata. Demand is further constrained by visa restrictions, restrictive bilateral agreements and high passenger charges.
African carriers face the highest unit costs globally, almost double the industry average. Among the many factors contributing to the high cost of operations in Africa are high fuel costs, fragmented markets and older fleets. Furthermore, the average corporate tax rates of 28% on the continent are the highest among all regions in the world.
Iata said Africa’s airline industry will continue to operate with thin margins and limited resilience even as air traffic on the continent expands faster than the global average. Low-cost airlines in South Africa, such as Kulula (Comair), Mango, 1Time and Nationwide, have all ceased to exist due to various challenges, including liquidation and poor management.
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