In fact, IATA has toned down its 2026 numbers, cautioning that we’re only looking at a 2.1% gain in demand. The trouble in West Asia is sending fuel costs through the roof. For an airline trying to keep fares from being too much of a stretch in a softening economy, the pressure to hold onto margins is on.
They look at revenue passenger kilometres to get a handle on demand – you can think of it as a mix of how many people are in the air and how far they’re going. It’s a long way off the 4.9% we were told to expect back in December.
Fuel shock reshapes airline playbook
It’s been a few years since airlines have had to deal with a cost curve like this. IATA is putting the industry’s 2026 fuel tab at $350 billion, up from $252 billion last year. We’re talking about jet fuel running an average of $152 a barrel, which is 70% more than what you’d see in 2025.
You can put that on the P&L. Net profit for the industry is on track to be cut in half to $23 billion in 2026, compared to the $45 billion of the prior year. Even with higher ticket and add-on fees, the profit per head will fall to $4.50 from $9.10.
Forecast cut and what it signals
There’s a softer macro picture behind the lull in demand. IATA sees the global economy cooling to 2.5% in 2026, down from 3.4% in 2025, and inflation could be in the 5% range. When your cost of living and your fuel are both up, there’s not much room for either a household or a carrier to move.
But the association is quick to point out the industry’s toughness. “While growth is weaker and more uneven across regions, the industry continues to expand,” IATA says. Demand has levelled off, not given up the ghost.
Regional winners and laggards
The Middle East is where you’ll see the steepest drop. We’re forecasting an 11.4% pullback in 2026 as airspace issues and longer flights make it harder to move people through key hubs. The region is home to 9.5% of all passengers but over 40% of the connecting ones.
Asia-Pacific is the one to watch for a turnaround; with 5.1% in the offing, it will put in more than half of the world’s total. In Europe, 2.8% is the number, driven by some long-haul rerouting and a return to the kind of short trips you take to see family or for a bit of R&R.
Africa will top the charts for growth at 10%, though the base is small. Latin America is in at 5.0% with some sturdy local economies to thank. North America is the slowest at 0.8%; the US market is mature and the domestic side isn’t offering much of an upside right now.
A few of the big changes for 2026:
– 11.4% drop in Middle East traffic
– More than half of the growth comes from Asia-Pacific
– Africa’s 10% is the fastest, if from a low starting point
– 2.8% in Europe on the back of shorter getaways
– 5.0% in Latin America
– 0.8% in North America
India feels the squeeze
With costs and distances on the up, Indian airlines are making some cuts. We’ve seen them put a pause on a number of international runs between June and August, like Delhi to Chicago and Mumbai to New York, and dial back on some European services.
Rerouting because of the situation in Iran has been costly, and with Pakistan’s airspace off-limits to them, it adds to the problem. They’ve even had to scale back some of their own home turf for June and July as the price of a tank of jet fuel goes up.
What to watch next
If you read between the lines of IATA’s latest, you’ll see carriers are going to be more about yield than moving bodies, as long as they can keep the most reliable routes open. Don’t be surprised to see them rein in capacity on the marginal ones and put their money where the action is in Asia and on short-haul in Europe.
Some things to keep an eye on in the coming months:
– Fares and the like are on the way up
– A moderation in demand, as IATA puts it, not a collapse
– Asia-Pacific to do the heavy lifting on growth
