The airline industry is projected to experience a significant capacity increase in 2026, with the International Air Transport Association (IATA) forecasting a year-on-year growth of 4.9% in passenger traffic. This growth follows a solid performance in 2025, despite ongoing challenges related to aircraft deliveries and an aging pilot workforce.
According to IATA, passenger traffic is expected to be measured in Revenue Passenger Kilometers (RPK), with total revenue anticipated to reach $1 trillion. This includes $751 billion from passenger transport and $158 billion from cargo operations. The number of origin-destination passengers is set to rise from 4,269 million in 2025 to 4,458 million in 2026, while the total number of flights is expected to increase from 38.9 million to 40.3 million.
Regional Growth and Challenges
Passenger growth varies across regions, with notable increases projected for the Asia Pacific at 7.3%, Africa at 6.0%, and Latin America at 6.6%. Europe is expected to grow by 3.8%, while the Middle East anticipates 6.1% growth. North America, in contrast, is projected to see a modest increase of 1.5%.
Despite this positive outlook, the industry faces several constraints. The median age of active air transport pilot license holders in the United States has risen from 45 to 49 in 1999 to 50 to 54 by 2024. This trend has resulted in a growing share of pilots nearing mandatory retirement, coupled with a decline in younger pilots entering the workforce.
Air Cargo Resilience and Profit Margins
The air cargo sector remains resilient, expected to grow by 2.6% in 2026, thanks to factors such as increasing demand for high-value, time-sensitive goods and a shift towards e-commerce. The challenges posed by uncertain trade policies in previous years, notably during the Trump administration, have positioned air cargo as a critical component in adapting to market changes.
IATA’s forecast reveals that the global airline industry is on track for a record net profit of around $41 billion in 2026, with a net profit margin of 3.9%. While this represents a positive trend, it underscores the low margins typical in the industry. For instance, the net profit per passenger can be as low as $1 for African airlines, contrasting sharply with technology giants like Apple, which reported a net profit of $112 billion in fiscal 2025.
The ongoing shortage of aircraft and engines presents another challenge. Boeing and Airbus have struggled to meet delivery targets, with a significant backlog affecting the supply chain. In 2026, deliveries are expected to align with pre-COVID trends, but the industry still faces a shortage of roughly 5,340 aircraft compared to pre-pandemic levels. The delay in engine production exacerbates the issue, as many aircraft are currently assembled without engines and stored until they become available.
Aviation analytics firm Cirium also predicts a 3.6% growth in seat capacity for 2026, highlighting similar trends to IATA’s forecasts. The demand for new aircraft remains robust, particularly in the Asia Pacific region, which is projected to account for 45% of global deliveries over the next two decades.
Long-term growth in the aviation industry is anticipated, with Cirium estimating that 46,500 aircraft will be delivered globally over the next 20 years. As the industry navigates the complexities of recovery and growth, the focus on emerging markets, particularly in Asia, remains crucial.
In summary, while the airline industry is set for notable growth in 2026, it is essential to remain aware of potential disruptions that could impact forecasts. The combination of increasing passenger demand, evolving market dynamics, and supply chain challenges will shape the future of global aviation.
