The airline industry is poised for growth in 2026, with the International Air Transport Association (IATA) forecasting a 4.9% increase in passenger traffic. This projection is measured in Revenue Passenger Kilometers (RPK) and reflects a robust year in 2025, despite challenges that may hinder full recovery. The anticipated growth follows a trend of high load factors, expected to remain around 83.8%, which will likely enhance airline yields and profits.
Passenger aviation is set to expand, particularly driven by the Asia Pacific region, which is projected to experience a significant 7.3% growth. IATA estimates that the number of origin-destination passengers will rise from 4,269 million in 2025 to 4,458 million in 2026. The total number of flights is also expected to increase from 38.9 million to 40.3 million. Overall revenue for airlines is projected to reach $1,053 billion, with $751 billion attributed to passenger transport and $158 billion from cargo.
While growth is promising, the industry faces several constraints. A notable concern is the aging workforce of pilots, particularly in the United States, where the median age has risen from 45 to 49 in 1999 to between 50 and 54 by 2024. The increasing number of pilots nearing mandatory retirement has more than doubled, coupled with a decreasing influx of younger pilots entering the profession.
Air Cargo to Remain Strong Amid Uncertainty
In 2025, the trade policies under the Trump administration introduced volatility, with significant tariffs being imposed. IATA noted that air cargo played a crucial role during this period, enabling rapid adaptation and allowing goods to reach markets ahead of tariff deadlines. Looking ahead, air cargo is expected to sustain its strength, bolstered by investments in artificial intelligence, increased demand for time-sensitive goods, and a shift toward e-commerce.
Despite the challenges in passenger transport, the air cargo sector is forecasted to grow by 2.6% in 2026. This growth comes even as airlines have retained passenger aircraft, which disrupts the typical passenger-to-freighter conversion cycle. The global aviation industry is anticipated to exceed $1 trillion in revenue for the first time in 2025, with a projected net profit reaching approximately $41 billion in 2026.
In terms of profit margins, the airline industry continues to be characterized by low margins, with the net margin expected to hold steady at 3.9%. This is starkly contrasted with major corporations like Apple, which reported a net profit of $112 billion for fiscal 2025, highlighting the financial constraints faced by airlines.
Aircraft and Engine Availability Challenges
Despite the demand for increased air travel, aircraft manufacturers such as Boeing and Airbus have struggled to meet delivery targets. Although there has been some recovery, delays in models such as the Boeing MAX 7, MAX 10, and 777X persist. In 2021 through 2024, aircraft orders fluctuated between 1,040 and 1,377, with an expected uptick to 2,184 orders in 2026.
IATA has reported approximately 5,340 missing aircraft deliveries compared to pre-pandemic trends, exacerbated by supply chain issues, particularly in engine production. Major manufacturers like Pratt & Whitney, Rolls-Royce, and GE/CFM are facing delays, which has led to many aircraft being assembled without engines and subsequently stored. This mismatch between airframe and engine availability complicates delivery schedules and impacts fleet operations.
Cirium, an aviation analytics firm, forecasts a 3.6% growth in seat capacity for 2026, indicating a similar trend to passenger demand. They highlight that the aircraft supply shortages, particularly for widebody aircraft, remain critical, with a deficit of around 700 units noted. The demand for narrowbody aircraft is less acute, with fewer than 200 units in short supply.
While the outlook for 2026 remains cautiously optimistic, it is essential to recognize that various factors can influence growth trajectories in the aviation sector. Historical events such as trade wars and pandemics have shown potential to disrupt airline operations significantly. Nonetheless, the long-term forecast remains positive, with Cirium projecting that 46,500 aircraft will be delivered globally over the next 20 years. The Asia Pacific region is expected to lead this growth, contributing to 45% of global deliveries, driven by demand from China and India.
In summary, the airline industry is on track for growth in 2026, with significant challenges related to workforce demographics and aircraft availability that must be addressed for sustained success.
