According to the International Air Transport Association’s (IATA) revised financial outlook, released at its 81st Annual General Meeting in New Delhi, airlines worldwide are expected to generate US$36 billion in net profits this year, up from US$32.4 billion in 2024. However, that optimism is tempered by persistent structural issues, particularly in the cargo segment. Despite a slight rise in volumes—up 0.6 percent to 69 million tonnes—air cargo revenues are forecast to fall by 4.7 percent, reaching US$142 billion.

While the broader aviation industry may be recovering, cargo operators are seeing profit margins squeezed by weak global trade, increased compliance costs, and persistent capacity constraints.

“2025 is shaping up to be a better year than 2024,” said IATA Director General Willie Walsh. “But a per-passenger profit of just US$7.20 leaves the industry highly vulnerable. Any new tax, navigation charge hike or regulatory burden could erase these gains.”

Global trade headwinds

The air cargo outlook reflects an increasingly fragmented global trade environment. GDP growth is expected to soften to 2.5 percent—down from 3.3 percent in 2024—while protectionist policies and unpredictable cross-border regulations weigh heavily on cargo yields, which are set to decline by 5.2 percent in 2025.

This comes after a notable 11.3 percent growth in yields the previous year, highlighting the volatility in demand for key sectors such as pharmaceuticals, semiconductors, and e-commerce. Despite the broader slowdown, cargo-related corporate travel remains resilient, with 68 percent of business travelers planning to increase overseas engagement, according to IATA polling from April 2025.

This continued engagement reinforces air cargo’s indispensable role in time-sensitive supply chains—but also raises the stakes for ensuring cost efficiency and reliability.

Soaring SAF costs

The price of jet fuel is projected to average US$86 per barrel in 2025, a 13 percent drop from 2024, offering a degree of short-term relief. Still, benefits are uneven. Cargo carriers operating older widebody fleets face higher fuel burn rates, exacerbated by route diversions driven by geopolitical disruptions in regions like the Red Sea and Eastern Europe.

At the same time, the cost of Sustainable Aviation Fuel (SAF) is surging. SAF production is expected to double to 2 million tonnes—still only 0.7 percent of global aviation fuel use—but prices are projected to be more than four times that of traditional fuel, up from 3.1 times in 2024. This spike is largely due to regulatory costs and supply bottlenecks in Europe.

“The behaviour of fuel suppliers is an outrage,” said Walsh. “We need exponential production increases to avoid SAF becoming a luxury item.”

Cargo carriers, often operating on thinner margins, are particularly exposed. SAF compliance is expected to add US$1.6 billion in surcharges across the industry, while CORSIA-related carbon offset obligations will reach US$1 billion in 2025. So far, only Guyana has issued carbon credits that meet IATA’s quality criteria.

Aircraft shortages and maintenance issues

One of the most serious challenges facing the cargo sector is the shortage of aircraft. Global aircraft orders now top 17,000, but only 1,692 new deliveries are expected this year—a 26 percent shortfall from projections. Average wait times for new aircraft exceed 14 years.

Engine issues, particularly involving PW1000G-equipped jets, have grounded over 1,100 relatively young aircraft—roughly 3.8 percent of the global fleet, nearly triple pre-pandemic levels. This has slowed widebody conversions and fleet renewals, leaving many cargo operators reliant on older, less efficient aircraft. The average aircraft age now stands at 15 years, dragging down operational performance and worsening emissions intensity.

“Manufacturers are failing their customers,” Walsh said. “Airlines are losing efficiency and market flexibility at a critical moment.”

A mixed picture

Regionally, the air cargo picture is varied. The Middle East leads in profitability with an 8.7 percent margin, thanks to strong demand and oil-linked currency advantages. Europe follows with US$11.3 billion in expected profits, benefiting from aircraft availability and currency stability.

Asia-Pacific shows strong traffic but faces economic headwinds, particularly in China, as well as lingering route restrictions to the U.S. Latin America is the only region projected to see a decline in profitability, due to currency depreciation and a proposed 26.5 percent VAT on air travel in Brazil. Africa remains constrained by structural issues, including foreign exchange shortages, limited access to spare parts, and underdeveloped infrastructure.

Reform for resilience

To navigate this complex landscape, IATA has outlined several strategic priorities for cargo stakeholders. Chief among them is the need to harmonise trade documentation and customs procedures, which remain fragmented and inefficient. Aligning national systems with international standards would significantly reduce delays and lower transaction costs.

Accelerating the adoption of digital infrastructure is another critical step. Full implementation of the e-Air Waybill and IATA’s ONE Record framework is essential for enhancing cargo visibility, automating processes, and building operational resilience.

On the sustainability front, cargo carriers urgently need targeted policy support to adopt SAF. Unlike passenger airlines, many freighter operators lack access to incentive programs or offset markets. IATA is calling for dedicated financing mechanisms and subsidies to make SAF adoption viable across the sector.

Finally, modernising aging fleets and expanding maintenance, repair, and overhaul (MRO) capacity must become a top priority. Without investment in next-generation aircraft and better maintenance capabilities, cargo operators risk falling behind on both performance and environmental compliance.

Tipping point

While the global aviation industry is cautiously optimistic about 2025, the outlook for air cargo is far more complex. Margin pressure, regulatory costs, and infrastructure bottlenecks are creating a turbulent operating environment that requires coordinated action from policymakers, manufacturers, and fuel suppliers alike.

As Walsh summed up, “Resilience must be engineered—not assumed.” For the air cargo industry, staying competitive in a shifting global economy will depend on structural reform, smart investment, and a renewed commitment to sustainability and efficiency.