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Airlines are facing big risks this year and must gear up to rise above these challenges as profitability is still foreseen for the industry, according to the International Air Transport Association
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There are five key risks for the air transport industry: Policy fragmentation, hardware supply, climate disruption, digital developments, and the macro-economic landscape
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In global civil aviation, national and regional policy initiatives that depart from the International Civil Aviation Organization’s 80 years of global harmonization are a serious threat
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The record-high backlog of aircraft orders persists
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Digital risks involve growing cyberattacks and artificial intelligence
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On macro-economics, the US dollar’s value will have a significant impact on cross-border payments
Airlines are facing big risks this year and must gear up to rise above these challenges as profitability is still foreseen for the industry, according to the International Air Transport Association (IATA).
“In 2026, risks abound. Having a view of what these might entail is important for planning and decision-making and the impact they may have on airlines,” writes Marie Owens Thomsen, IATA senior vice president for sustainability and chief economist.
Thomsen, summarizing the IATA brief titled An assessment of risks in 2026: Converging risks and vulnerabilities, points to five key risks for the air transport industry.
Top of the list is policy fragmentation, especially in global trade as well as in international institutions.
“Decades of trade liberalization have now been replaced with a more fragmented trade order. Other UN (United Nations) organizations face a similar loss of relevance,” the IATA report states.
In global civil aviation, national and regional policy initiatives that depart from the International Civil Aviation Organization’s 80 years of global harmonization are a serious threat.
“Different frameworks now compete to determine how to address CO₂ emissions from air transport. Fragmented tax policies introduce severe competitive distortions that ripple across the global network even though the policy may appear locally focused. Such policies raise little money for governments, have little or no impact on emissions, and make air transport more expensive,” Thomsen said.
Second risk is on the hardware front, specifically the continued record-high backlog of aircraft orders. IATA says while there have been improvements in recent years, the mismatch between airline requirements and production is not expected to unwind before 2031-2034.
The aircraft shortage limits industry growth, although it protects yields as aircraft load factors reach the highest level in aviation history. Another negative impact is how the situation has halted progress in improving fuel efficiency across the global fleet and slows the industry’s decarbonization.
Meanwhile, climate-related disruptions such as extreme weather are another threat as well as commodity price swings that can affect agriculture, infrastructure, global trade, and investment flows.
“A successful energy transition for airlines pursuing net zero carbon emissions by 2050 requires stable policies and reliable financing. The reduced commitment to addressing climate issues in a coordinated manner across the world will undoubtedly slow progress on all these fronts,” Thomsen said.
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Fourth are risks related to digital developments with cyber threats “growing in both frequency and importance.”
“We also see a convergence of risks and vulnerabilities with artificial intelligence (AI) enhancing attackers’ capabilities, geopolitical instability providing fertile breeding ground, and digital dependence exposing supply chains and organizations to greater risks,” Thomsen said, adding that AI as a tool for improved efficiency and profits may still take years to materialize.
On macro-economics, the US dollar’s value will be crucial as it remains the main currency for cross-border payments.
“A weaker US dollar tends to benefit all non-USD-based countries who will pay less in local currency for their USD-denominated debt and trade. This is of course important for air transport where over 50% of the cost base is invoiced in US dollars,” Thomsen said.
Notwithstanding all these risks for the new year, Thomsen notes that the air transport industry also faced significant headwinds at the start of 2025, the biggest of which was the threat of US tariffs, but still came out with a record net profit of $39.5 billion.
This year, the airline industry is seen to have a 3.9% margin, on the positive territory but still one of the lowest among all industries.
READ: Global air cargo demand accelerates to 5.5% growth in Nov 2025
“Yet it so happens that the energy transition and air transport combine to deliver a uniquely promising growth strategy,” Thomsen said, and that strategy can help improve agriculture and local communities, connect people, and lift productivity, among other positive impacts.
He adds, “Even without quantifying all those dynamic effects, the airline industry supports 87 million jobs and 4% of global GDP (gross domestic product). Air transport is not just about flying—it’s about driving progress.”
