Aviation industry profitability and emerging challenges

As the world welcomed the year 2025, there was optimism that the global aviation industry would post some positive numbers. Revenues were expected to exceed one trillion dollars for the first time while more than five billion travellers were expected to take to the skies on over forty million flights. Also, there was an expectation that air cargo would carry some 72.5 million tonnes of goods from a report by IATA, the global body that represents, leads and serves the airline industry.

Airlines are not just barometers of travel — they’re frontline indicators of economic health. Booking declines signal shifts in consumer confidence long before GDP numbers do. Today, that signal may be flashing red.

Almost all industries are positively impacted by connectivity. So, where there is growth, aviation connectivity will provide an important lever for the economies of the world. As passenger numbers increase due to growth, industry experts expect that retail, and hospitality will immediately meet with this rising number of customers – and so will other businesses too. And for airlines it was seen as a pointer to increased profitability.

As is usual with planning, some downside risks were anticipated such as geopolitical uncertainty. Aside from the possibility of escalation in conflicts, the new US Administration under Trump could provoke trade wars if it imposes tariffs. Experts saw it as a possibility in the new year. Trump’s attitude toward climate change could also affect the industry’s decarbonization efforts, the industry also anticipated. 

It was anticipated that across regions, the outlook would be positive across the board and all regions should post a profit in 2025. Like it had been, profitability was expected to vary widely by carrier and by region. For example, the collective net profit margin of African airlines was expected to be just 0.9 percent while carriers in the Middle East were expected to make a healthy 8.2 percent.

Presently, in what will make strategists in the industry revisit their scenario plans, the combination of mounting US tariffs, escalating visa problems, and increasingly stringent border security checks is derailing this optimism fast.

Airlines which had made plans on international connectivity to drive profits are reportedly revising forecasts, as US tariffs spark retaliatory trade measures, making aircraft deliveries and cross-border logistics more expensive. At the same time, visa problems — including prolonged processing delays, frequent denials, and abrupt policy changes — are discouraging inbound United States travellers and frustrating outbound U.S. passengers too. In addition to this troubling scenario, border security checks have reportedly become longer, more complex, and less predictable, leading to missed flights, strained airport operations, and reduced traveller confidence.

Now keeping industry strategists awake is this combination of US tariffs, visa problems, and border security check. It is not only derailing the airline industry outlook in North America — it’s disrupting global travel corridors  and at the same time negatively impacting passenger demand, and threatening to reverse hard-won gains in aviation recovery worldwide.

There are pointers that international carriers, tourism economies, and logistics providers are reeling from the cascading effects. So, the entire aviation sector is gravitating towards a crisis management mode. Looking ahead, it seems that without intervention, the US risks becoming a bottleneck in the global travel system — and aviation’s recovery could stall for some time.

Tariffs and trade wars can significantly impact African countries’ budgets and aviation industries. African countries may face decreased demand for their raw materials, leading to lower export revenues and increased fiscal pressures. Tariffs can lead to higher prices for imported goods, including those essential for economic development and infrastructure projects. Countries in the continent may struggle with reduced revenue and increased costs, potentially reversing fiscal consolidation efforts.

African airlines rely on leasing aircraft and sourcing parts from the US and Europe, so increased tariffs can lead to higher costs and longer delivery times. Maintenance, repair, and overhaul operations in Africa may face delays and cost hikes due to imported spare parts. African airlines may need to rethink partnerships, diversify suppliers, and strengthen regional cooperation to mitigate dependency on Western aircraft and parts.

Strengthening regional trade through AfCFTA can help African countries reduce reliance on external markets and build resilience against global trade shocks. Also, African countries can explore new trade partnerships and agreements to reduce dependence on specific markets.

This is a wake-up call for the continent to consider travel across multimodal hubs. Airports should be easy to get to and exit for the traveller. Family and friends should be able to return home without much stress when the passenger has embarked on a plane. Upgrading regional infrastructure, such as rail systems and road networks, can enhance intra-African trade and economic integration and so ensure the continent is able to meet with the current emerging challenges.

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