Visa restrictions, high charges threaten African air travel – IATA

The International Air Transport Association (IATA) released its latest financial outlook for the global airline industry showing a stabilization of profitability even as supply chain issues persist. IATA in the outlook observed that airlines are expected to achieve a combined total net profit of $41 billion in 2026 (up from $39.5 billion in 2025). However, […]

The International Air Transport Association (IATA) released its latest financial outlook for the global airline industry showing a stabilization of profitability even as supply chain issues persist.

IATA in the outlook observed that airlines are expected to achieve a combined total net profit of $41 billion in 2026 (up from $39.5 billion in 2025).

However, the outlook isn’t looking good for Africa, according to the outlook.

IATA, representing 360 airlines carrying over 80% of global air traffic, stated that low GDP per capita across much of the continent limits discretionary spending, making air travel highly price sensitive and restricting its growth potential.

According to IATA, demand is further constrained by visa restrictions, restrictive bilateral agreements, and high passenger charges.

“Moreover, African carriers face the highest unit costs globally, with average cost per ATK near 140 US cents, almost double the industry average. Among the many factors contributing to the high cost of operations in Africa are high fuel costs, fragmented markets, older fleets, and average corporate tax rates of 28% (the highest among all regions),” he said.

Until these constraints ease, Africa’s airline industry will operate with thin margins and limited resilience, even as traffic expands faster than the global average, the association said.

According to the outlook, while the $41bn profit would set a new record, the net profit margin is expected to be unchanged from 2025 at 3.9%.

 

Net profit per passenger transported is expected to be $7.90 (below the 2023 high of $8.50, and unchanged from 2025).

 

Operating profit in 2026 is expected to be $72.8 billion (up from $67.0 billion in 2025) for a net operating margin of 6.9% (improved on the 6.6% expected for 2025).

 

Return on invested capital (ROIC) is expected to be 6.8% (unchanged from 2025). Despite deleveraging and improved operating profitability, ROIC is expected to remain below the weighted average cost of capital (WACC) estimated to be 8.2% in 2026.

 

Total industry revenues are expected to reach $1.053 trillion in 2026 (up 4.5% on the $1.008 trillion expected revenues in 2025).

 

At the same time, load factors are forecast to continue to set record highs with airlines expected to fill 83.8% of all seats over the year 2026 while passenger numbers are expected to reach 5.2 billion in 2026 (up 4.4% on 2025).

 

Also, Cargo volumes are expected to reach 71.6 million tonnes in 2026 (up 2.4% on 2025).

 

“Airlines are expected to generate a 3.9% net margin and a $41 billion profit in 2026. That’s extremely welcome news considering the headwinds that the industry faces—rising costs from bottlenecks in the aerospace supply chain, geopolitical conflict, sluggish global trade, and growing regulatory burdens among them. Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability,” said Willie Walsh, IATA’s Director General.

 

While strong performance of airlines in the face of a changing and challenging operating environment is impressive, the fact that the airline industry collectively does not generate earnings that cover its cost of capital remains an issue to be resolved.

 

“Industry-level margins are still a pittance considering the value that airlines create by connecting people and economies. They stand at the core of a value chain that underpins nearly 4% of the global economy and supports 87 million jobs. Yet Apple will earn more selling an iPhone cover than the $7.90 airlines will make transporting the average passenger. And even within the air transport value chain, airline margins are totally out of balance, particularly when compared to margins of engine and avionics manufacturers and many of our service suppliers. Imagine the additional power that airlines could bring to economies if we could re-balance value chain profitability, reduce regulatory and tax burdens, and alleviate infrastructure inefficiencies,” added Walsh.