IATA Sharply Downgrades Forecast for Airlines: Why Tickets May Become More Expensive in 2026

The International Air Transport Association (IATA) published a new financial forecast for global aviation on June 7, significantly lowering expectations for 2026. The main conclusion for passengers is simple: airlines remain profitable overall, but their margin of safety has sharply decreased, and high jet fuel prices are already pushing fares upward.

According to IATA's estimate, the total net profit of airlines in 2026 could be $23 billion. This is nearly half of the $45 billion the industry earned in 2025, according to preliminary estimates, and significantly lower than the previous forecast for 2026 of $41 billion. The expected net margin is dropping to 2%, and profit per passenger carried is falling to $4.50.

For travelers, this does not mean an automatic halt to air travel or a new global collapse. On the contrary, IATA expects that in 2026, airlines will carry approximately 5.1 billion passengers, and the average load factor will reach a record 84%. The problem lies elsewhere: demand remains strong enough, but costs are rising faster than airlines can compensate for them. In such a situation, some costs are passed on to fares, some eat into profitability, and some force carriers to review schedules, aircraft fleets, and commercial policies.

What Exactly Changed in the IATA Forecast

The new IATA forecast was presented during the organization's 82nd annual meeting in Rio de Janeiro. At the center of the assessment is a combination of two factors: military disruptions in the Middle East and a sharp increase in the cost of aviation fuel. According to the association's calculations, airline fuel costs in 2026 could rise from $252 billion in 2025 to $350 billion. The average price of jet fuel is estimated at approximately $152 per barrel compared to $90 a year earlier.

This is very painful for aviation because fuel is once again becoming one of the largest expense items. IATA estimates that its share in the industry's operating costs will rise to 31.4% compared to 25.4% in 2025. Even if some airlines hedged their purchases in advance, such protection does not fully cover a prolonged period of high prices and does not eliminate the risk of more expensive jet fuel compared to the base price of oil.

Parallel to this, IATA expects passenger revenues for airlines to grow to $839 billion, an increase of approximately 9.2% over 2025. However, demand in passenger-kilometers is forecast to increase by only 2.1%. This difference shows that a significant part of the revenue growth will be driven not so much by additional passengers, but by higher average fares and revenues from ancillary services.

Why the Middle East Became a Key Risk

The hardest hit is the Middle East. According to IATA's forecast, airlines in the region could move from a profit of $7.2 billion in 2025 to a total loss of $4.3 billion in 2026. The expected drop in demand in the region is estimated at 11.4%, and capacity at 4.4%.

The reason is not only the cost of fuel. Middle Eastern hubs traditionally play a huge role in long-haul transfers between Europe, Asia, Africa, and Australia. When airspace or specific corridors become unstable, some passengers shift to other routes, direct flights, or alternative hubs. This reduces load factors on some transfer routes, increases costs for detour routes, and makes schedule planning less predictable.

For the passenger, this may manifest differently across flights. On some routes, longer flight paths and higher fares appear, while on others, there are temporary frequency reductions, changes in connection times, or increased demand for alternative airports. If a journey involves major transfer centers, it is worth checking the schedule more carefully before departure and allowing more time for connections. This is especially relevant for routes through Dubai Airport (DXB), Doha Hamad Airport (DOH), Abu Dhabi Airport (AUH), and Istanbul Airport (IST), which are often used for long-haul flights between regions.

Why Tickets May Become More Expensive Not Only on Middle Eastern Routes

The high price of aviation fuel affects the global market, so the impact is not limited to flights through the Persian Gulf. IATA specifically notes that Europe is heavily dependent on fuel imports from the Gulf region, and the Asia-Pacific region also feels pressure due to oil imports, longer routes, and currency fluctuations. In North America, where many airlines use fuel hedging less, the increase in fuel costs may be passed on to carrier costs more quickly.

In practice, this means that price increases may be uneven. They are often most noticeable on long-haul and complex transfer routes, where fuel accounts for a larger share of the cost. Business class and premium fares may increase faster, as airlines have more room to compensate for costs there. But economy class is not isolated: if a carrier reduces cheap promotional fares, introduces stricter baggage rules, or more actively sells ancillary services, the real cost of the trip for the tourist increases.

It is also important that airlines cannot always simply raise prices without consequences. Some passengers become more price-sensitive, especially on leisure destinations. Therefore, carriers balance between more expensive tickets, reducing less profitable flights, higher aircraft load factors, and additional revenues from baggage, seats, priority boarding, or booking changes.

What This Means for Summer Travel

For tourists, the main conclusion is not to panic, but to plan more carefully. If the destination is already determined, early booking may be more advantageous than waiting until the last moment. In a period of high costs, airlines have fewer incentives to sell seats with significant discounts, especially for popular dates, school holidays, major sporting events, and routes with limited competition.

The second conclusion is that connections should become more conservative. When air corridors change and some routes bypass unstable zones, even a small delay can affect the next flight. If there is a choice between a very short transfer and a more relaxed option, it is safer to choose a time buffer in 2026. For overnight or long transfers, it is worth checking accommodation options in advance, such as hotels near Dubai Airport (DXB) or hotels near Doha Hamad Airport (DOH), if the route passes through these hubs.

The third conclusion is that one should look not only at the base ticket price. If a cheaper fare does not include baggage, seat selection, or flexible date changes, the final price may turn out to be higher than the fare of another airline. Against the backdrop of growing ancillary revenues, carriers are structuring products even more actively so that the passenger pays separately for each element of the journey.

Which Airlines May Be More Vulnerable

The greatest pressure is felt by carriers with thin margins, weaker balance sheets, high dependence on fuel, and a smaller share of premium passengers. Reuters, citing IATA leadership, notes that high fuel costs could accelerate bankruptcies and consolidation among some airlines. Low-cost carriers or small carriers may be particularly vulnerable if they lack a sufficient financial cushion, strong loyalty programs, premium cabins, or the ability to quickly redistribute aircraft to more profitable routes.

This does not mean that budget airlines automatically become a dangerous choice. Many low-cost carriers have an efficient operating model and are able to react quickly to demand. But passengers should monitor carrier notifications, compensation rules, refund conditions, and whether there are alternative flights on the route in case of cancellation. If it is an important journey with a transfer, a wedding, a cruise, or a paid excursion on the day of arrival, excessive saving on a short connection may not be worth the risk.

Why the Market Still Does Not Look Broken

Despite the sharp downgrade in the forecast, IATA does not describe 2026 as a full demand crisis. Under the base scenario, the industry remains profitable, passenger traffic is growing, and aircraft load factors are hitting records. This is an important clarification: aviation is not facing a sharp disappearance of the desire to travel, as happened during the pandemic. The current shock is primarily cost-driven, caused by more expensive fuel, detour routes, shortage of new aircraft, and macroeconomic pressure.

That is why the effect will be more complex than a simple formula of "fewer flights and more expensive tickets." On some routes, there may be more direct traffic if passengers avoid transfers in risky regions. Some African or Asian hubs may receive additional transit. European carriers may gain on certain direct routes between Europe and Asia, but at the same time lose due to high fuel costs, regulatory costs, and airspace restrictions.

For the tourism market, this means a period of redistribution. Tour operators, online agencies, and hotels will monitor aviation accessibility of destinations more closely. Resorts that depend on one or two carriers or on complex long-haul connections may feel demand fluctuations more strongly. In contrast, destinations with many direct flights, competition between airlines, and flexible hotel offerings will have a better chance of retaining tourists even with more expensive air travel.

How Travelers Should Act Now

The most practical strategy is to plan the flight as part of the entire trip, rather than as a separate cheap ticket. Before booking, it is worth comparing not only the price, but also the connection duration, baggage rules, route reputation, arrival time, possibility of overnight stay near the hub, and the cost of transfer after arrival. For major European connections, such as through London Heathrow (LHR), Paris Charles de Gaulle (CDG), or Frankfurt (FRA), it is also worth considering seasonal queues, strike risks, and additional time for security checks.

If the route passes through the Middle East, it is worth checking flight status not only the day before departure, but also on the day of travel. It is useful to have a backup plan: know which alternative flights exist, whether insurance covers delays and cancellations, and whether the fare allows changing the date without excessive penalties. After arriving at a major hub, it is also worth thinking through ground logistics in advance, such as transfer from Dubai Airport or taxi from Doha Airport, if arrival is planned for late evening or after a long transfer.

The main news from IATA for tourists is not that flying will become impossible, but that the era of very cheap and predictable air travel on many routes may temporarily fade into the background. In 2026, airlines will try to maintain their network, but they will do so under conditions of more expensive fuel, weaker margins, and more cautious capacity management. For passengers, this means: book smarter, read fare rules more carefully, and leave more room for unpredictable changes.