Special Report: Iata highlights challenges as Walsh signs off

The rise in jet fuel prices due to the Gulf crisis will cut global airline profits by half this year on 2025 despite carriers aiming to recoup much of the additional costs through higher fares.

 

That is according to airline association Iata, whose director general Willie Walsh told the Iata annual general meeting in Rio de Janiero: “We expect average jet fuel prices to be 70% higher year on year. That will add $100 billion to our collective fuel bill.”

 

Walsh noted: “Demand is holding up even as airlines are raising fares. But growth will inevitably be slower. We expect profitability to halve from 2025.”

 

Iata now forecasts a 2% rise in global passenger numbers this year on last, but Walsh said: “The big unknown is how long travellers can tolerate higher costs.”

 

Walsh argued the rise in fuel costs had been made worse by carriers being forced to operate aircraft “less efficient than planned” because of the continuing failure of manufacturers to deliver aircraft and engines on time.

 

Iata reported the backlog in aircraft orders has surpassed 18,000 and the shortfall of more fuel-efficient aircraft which would now be in use if not for production delays had passed 5,000.

 

This meant “higher lease rates and increased maintenance costs”, said Walsh, with the retention and operation of older aircraft meaning the average age of the world’s fleet age had reached a record 15.2 years. 

 

Iata estimated the total cost of delivery delays to airlines at $11 billion last year and Walsh warned: “Today’s higher fuel prices will only make that worse.”

 

He accused engine manufacturers of “gouging” the airlines and said: “Get back to making engines that work and that last.”

 

Walsh announced plans for Iata to invest “significantly” in strengthening its office in Brussels, insisting “a strong airline voice is needed” in Europe

 

He claimed global standards “are being ignored” on aviation taxes and air passenger rights, describing the EU Regulation 261 on air passenger rights as “the poster child of bad regulation” and accusing the EU Parliament of “hijacking” proposals for reform.

 

Walsh also hit out over Heathrow expansion, accusing “a floundering UK government” of being “desperate for the growth a third runway will catalyse, but not paying sufficient attention to basic economics”. 

 

He dismissed a recent comment by Heathrow chief executive Thomas Woldbye that breaking up the airport “will be a red line” for its investors as “an outrage”.

 

‘Where is the SAF?’

 

Carriers worldwide will spend an estimated $4.3 billion on Sustainable Aviation Fuel (SAF) this year, taking their consumption to 2.4 million tonnes. But that amounts to just 0.8% of global aviation fuel consumption.

 

Walsh told the Iata AGM: “Airlines have sent unambiguous demand signals for SAF, with over 180 purchase agreements. But where is the SAF?”

 

He noted “the goal is 65% or 500 million tonnes of SAF by 2050” and said: “The gap is not closing fast enough.”

 

Walsh noted SAF projects had been “cancelled or downsized” in Sweden, the Netherlands, Germany, Spain, Denmark, the UK and Singapore and said: “Subsidies to extract fossil fuel are just too appealing.”

 

He described the situation in the EU and UK, where SAF mandates have been in place since January 2025, as “absurd”, saying: “Airlines are paying billions in ‘compliance add-ons’ [which] compensate fuel suppliers for penalties for not making sufficient SAF.”

 

Walsh warned “there is no path to meet” a 5% emission reduction target through SAF by 2030 and said: “Hope for 2050 is fading fast. We need a realistic timeline.”

 

The former boss of British Airways and its parent IAG, Walsh is poised to take over as chief executive of IndiGo Airlines in India from July.