Airlines are expected to face a fuel bill of about USD 350 billion this year as the Middle East conflict drives up jet fuel prices, putting further pressure on an industry already operating on thin margins.
Global airline profitability is expected to fall sharply in 2026 as higher fuel prices and disruptions linked to the conflict in the Middle East weigh on carriers’ finances, according to the latest outlook from the International Air Transport Association (IATA).
IATA now expects airlines worldwide to post a combined net profit of USD 23 billion in 2026, down from an estimated USD 45 billion in 2025 and roughly half the USD 41 billion profit forecast earlier for this year. The industry’s net profit margin is projected to decline to 2.0%, compared with 4.2% in 2025.
Despite the deterioration, airlines are expected to remain profitable overall, supported by resilient passenger demand, high load factors and measures to offset some of the increase in operating costs.
Fuel bill set to reach USD 350 billion
Fuel is at the centre of the pressure on airline finances. IATA estimates that airlines will spend approximately USD 350 billion on fuel in 2026, compared with USD 252 billion in 2025 — an increase of almost 40%. Fuel is expected to account for 31.4% of total airline operating costs, up from 25.4% last year.
The industry forecast is based on an average Brent crude price of around USD 95 per barrel and an average jet fuel price of approximately USD 152 per barrel for 2026. IATA says jet fuel prices are expected to average nearly 70% higher than in 2025.
The sharp rise in energy costs follows the outbreak of war in the Middle East, which pushed oil and jet fuel prices higher and introduced additional volatility into global energy markets.
IATA Director General Willie Walsh said airlines were absorbing part of the fuel-price increase despite raising fares and improving efficiency, making it difficult for carriers to preserve last year’s profitability levels.
Airlines turn to fuel efficiency
With airlines facing limits on how much of the higher fuel bill can be passed on to passengers, operational efficiency is becoming increasingly important.
IATA says fuel efficiency is now a strategic priority for airlines, with data, benchmarking and smarter operational decisions offering opportunities to reduce fuel consumption without compromising safety or service.
The association’s analysis highlights the importance of understanding fuel performance at the level of individual aircraft, routes, flight phases and operating conditions. Benchmarking can help airlines identify areas where their fuel consumption differs from comparable operators and pinpoint potential savings.
Fleet renewal remains one of the most effective long-term routes to improving fuel efficiency. However, aircraft delivery delays and supply-chain constraints are limiting how quickly airlines can replace older, less-efficient aircraft. IATA has noted that these constraints are already costing airlines through higher fuel consumption, maintenance expenses and other operational costs.
Data and smarter operations gain importance
As rapid fleet modernisation remains difficult, airlines are increasingly looking at improvements that can be implemented within existing operations.
Better fuel data can help carriers identify opportunities across flight planning, aircraft operations and fuel management. IATA’s fuel-efficiency initiatives are designed to help airlines compare performance and identify operational measures that can reduce fuel burn.
The association has also highlighted the importance of collaboration beyond individual airlines. Inefficiencies in air traffic management, fragmented airspace and less-than-optimal flight routings can add unnecessary fuel consumption and operating costs.
More efficient air traffic management and direct flight paths could therefore deliver savings across the aviation sector without requiring changes to aircraft fleets or route networks.
Airfares face further pressure
The fuel shock comes at a time when airlines are already operating with structurally low margins. IATA expects industry revenues to rise by about 9.4% to USD 1.165 trillion in 2026, but operating expenses are forecast to grow by around 13%, reaching USD 1.117 trillion.
Passenger ticket revenue is expected to reach USD 839 billion, with airlines raising fares to recover part of the higher fuel and operating costs. At the same time, passenger demand is forecast to grow by about 2.1%.
IATA expects airlines to carry more than 5.1 billion passengers in 2026, while the global passenger load factor is projected to reach a record 84%. However, net profit per passenger is expected to fall to just USD 4.50, compared with USD 9.10 in 2025.
Industry resilience tested by geopolitical shocks
The latest outlook underscores the vulnerability of the global airline industry to sudden increases in fuel prices. While airlines can adjust fares, capacity, schedules and procurement strategies over time, rapid fuel-price increases can outpace their ability to recover costs.
IATA has previously noted that the speed of a fuel-price shock can be more damaging than a sustained period of high prices, as carriers need time to adjust commercial and operational strategies.
For 2026, the industry is therefore relying on a combination of pricing, fuel hedging, capacity discipline and operational efficiency to remain profitable.
As fuel costs rise and margins narrow, the ability to extract savings from every stage of an airline’s operation is becoming increasingly important. IATA says data-driven decision-making, more efficient flight operations and greater coordination across the aviation ecosystem will be key to protecting airline profitability in an increasingly volatile environment.
Source: International Air Transport Association (IATA), Global Outlook for Air Transport 2026 and related 2026 industry outlook updates.
