IATA Sharply Downgrades Forecast for Airlines: Why Tickets May Become More Expensive Even Though People Continue to Fly

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Marta Skylar
Aviation News Editor
28.07.2026 08:04

IATA Sharply Downgrades Forecast for Airlines: Why Tickets May Become More Expensive Even Though People Continue to Fly

The International Air Transport Association (IATA) has updated its forecast for the aviation industry for 2026 and warned of a significant deterioration in financial conditions for carriers. Travel demand has not disappeared, but growth is slowing, fuel is becoming sharply more expensive, and airlines are increasingly shifting part of the costs into fares. For tourists, this means fewer chances for widespread cheap air tickets during the peak season and greater importance of early route planning.

The new IATA forecast has become one of the most important signals for the travel market at the beginning of the summer. The organization expects that the total net profit of global airlines in 2026 will be $23 billion. This is approximately half of the previous forecast of $41 billion, and also almost half of the profit estimate for 2025. The industry margin, according to IATA's calculations, will drop to 2%, meaning airlines will remain profitable, but the margin of safety will become very thin.

The reason is not that passengers are massively refusing to fly. On the contrary, IATA predicts that the number of passengers in 2026 will reach 5.1 billion, and the average load factor of flights may break a record and reach 84%. The problem lies elsewhere: costs are growing faster than demand. Following the start of the war in the Middle East and disruptions in key energy routes, aviation fuel prices, according to IATA, will be on average almost 70% higher than last year. This adds approximately $100 billion to the annual fuel bill for airlines.

For travelers, this news is important not as abstract financial statistics. Aviation fuel is one of the largest expense items for a carrier, so a sharp increase in price quickly affects ticket costs, flight frequency, the availability of connections, and the commercial logic of routes. If an airline cannot compensate for the fuel shock with efficiency or hedging, it has only a few options: raise fares, sell more ancillary services, optimize schedules, or cut the least profitable directions.

What Exactly Changed in the IATA Forecast

In the June update, IATA called 2026 a challenging year for aviation, although not a crisis in terms of demand drop. Passenger business, measured in passenger-kilometers, is now expected to grow by only 2.1%. This is significantly more restrained than previous expectations, which were formed before the new fuel shock. The cargo segment will also grow more slowly: IATA speaks of 0.7% for the cargo tonne-kilometer indicator.

At the same time, total airline revenues are forecast to grow to $1.165 trillion. At first glance, this looks positive, but the structure of this growth shows tension. Revenues are increasing not only due to a larger volume of transport, but also due to higher fares and revenues from ancillary services. IATA expects passenger ticket revenues to reach $839 billion, and ancillary and other revenues, including baggage, seat selection, priority services, and cross-selling, to grow to $165 billion.

This means that airlines will more actively monetize every passenger. For tourists, this does not necessarily always mean a sharp increase in the base fare, but the total cost of the trip may increase due to baggage, connections, selection of a convenient time, seats next to companions, or flexible ticket change conditions. That is why comparing only the starting price of a flight is becoming an increasingly unreliable practice.

Why Fuel Became the Main Risk for Summer Travel

IATA estimates airline fuel costs at $350 billion in 2026 compared to $252 billion in 2025. The share of fuel in the industry's operating expenses is expected to rise to 31.4%. This is a very high level for a business that operates with a small margin even in normal years.

Some carriers are protected thanks to previous fuel purchase contracts, but such protection is not infinite. IATA notes that approximately one-third of the expected fuel consumption for 2026 is hedged worldwide. This softens short-term fluctuations, but does not save from a prolonged period of high prices. In Europe, the situation is partially eased by a higher level of hedging, however, as old contracts expire, the pressure may manifest more strongly in fares and schedules.

For the passenger, this means that air tickets may become more expensive unevenly. Long-haul flights, routes with long detours around closed airspaces, directions with limited competition, and flights where demand is consistently high may be the most sensitive to cost increases. In contrast, short tourist routes with high competition may maintain attractive prices longer, but even there, carriers will seek compensation through additional fees or less flexible fares.

This trend complements the broader picture, which we already wrote about in the material on jet fuel pressure and route changes through the Middle East. Then the main question was the risks for the summer season. Now IATA provides a financial assessment of the scale of the problem: the industry remains afloat, but almost all room for error is consumed by fuel, airspace restrictions, and more expensive fleet operation.

Demand Holds, but Tourists Become More Cautious

Separately, IATA draws attention to passenger behavior. According to the organization's data, 49% of respondents expect to spend more on travel over the next 12 months than in the previous year, and another 43% plan to spend approximately the same. This supports expectations of a strong summer season in the Northern Hemisphere, but it does not mean that travelers are ready to pay any price.

On the contrary, high fuel prices and general inflation may change the structure of demand. Tourists will more often compare not only air tickets, but also the total cost of the trip: accommodation, transfer, baggage, meals, insurance, local transport, and possible costs due to delays. In such a situation, destinations that provide a clear travel price, good flight frequency, and lower risk of complex connections win.

This also explains why in the summer of 2026, some tourists choose closer routes or flights within their own region. Such a shift is already noticeable in tourist demand, and it aligns well with previous IATA data that travelers are increasingly planning vacations closer to home. This trend was examined in more detail in our previous publication on why summer travel 2026 is shifting toward shorter and regional routes.

What This Means for Routes and Connections

Financial pressure does not always manifest for the passenger as a direct price increase. Sometimes it becomes noticeable through the schedule. Airlines may reduce frequencies on weaker directions, move aircraft to more profitable routes, limit risky experiments with new flights, or sell fewer cheap seats in lower fare classes. In the peak season, this can make popular flights more expensive a few weeks before departure.

Routes that depend on complex connecting hubs, long detours, or an unstable geopolitical situation are particularly vulnerable. Middle Eastern carriers, according to IATA, found themselves in the most difficult position due to operational disruptions, loss of part of the transfer flow, and high costs. At the same time, some carriers in Asia, Africa, and Europe may receive additional traffic on routes that bypass traditional Gulf connecting hubs.

For tourists, the practical conclusion is simple: in 2026, it is worth looking more closely at the reliability of the route, rather than just the lowest price. A cheap combination with several self-transfers may prove riskier if flights are operated under conditions of an overloaded schedule or unstable airspace. For long trips, it makes sense to leave a larger time buffer between flights, check baggage conditions, and buy a single ticket where this is critical for protection during disruptions.

Why New Aircraft Also Became Part of the Problem

The fuel shock is superimposed on another problem: airlines are not receiving new aircraft and engines at the rates they counted on. IATA indicates that the order backlog exceeds 18,000 aircraft, and the average fleet age has reached a record 15.2 years. Older aircraft consume more fuel, require more expensive technical maintenance, and do not allow the industry to quickly increase efficiency.

This is important for the travel market as well. When a carrier cannot quickly increase the fleet or replace old aircraft, it has less flexibility to open new directions, seasonal frequencies, and cheap additional flights. Even if the demand for vacations is high, the physical shortage of aircraft can limit the supply of seats. And when seats are few, the price usually becomes stiffer.

Delivery delays also affect schedule stability. If an aircraft is delayed in technical maintenance, the carrier has fewer backup aircraft for replacement. This increases the risk of chain delays, especially during periods of peak demand, bad weather, or airspace restrictions. Therefore, tourists should be more cautious about overly tight connections and flights after which a cruise, tour, or important event is immediately planned.

How Tourists Should Act in Conditions of More Expensive Air Travel

The current IATA forecast does not mean that all tickets will immediately become more expensive equally. The market remains competitive, and demand varies by region. But it suggests that waiting for a mass sale before the peak season is risky. If the destination is popular, the flight is convenient, and the dates are tied to a vacation, event, or school holidays, early booking may be safer than waiting until the last moment.

  • Compare the total cost of the ticket with baggage, seat selection, and change conditions, rather than just the base fare.
  • For long routes, check if all segments are issued in one booking.
  • Avoid short self-transfers, especially if the route passes through busy hubs.
  • Monitor schedule changes after purchasing a ticket: in periods of high costs, airlines may adjust frequencies.
  • For expensive or complex trips, consider insurance that covers delays, cancellations, and missed connections.

For tour operators and agencies, the new forecast also gives a clear signal. In package tours with air travel, the risk of cost changes increases, and clients become more attentive to the final price. A transparent explanation of what is included in the fare, what connections are provided, and what risks the package covers becomes a competitive advantage.

Conclusion

The June update from IATA shows not a collapse of air travel, but a transition to a more expensive and less predictable stage of the market. People continue to fly, planes remain full, and the summer season should be active. But airlines enter it with much weaker profitability, expensive fuel, a shortage of new aircraft, and pressure on schedules.

For travelers, the main conclusion is practical: in 2026, it is worth planning air trips more carefully, calculating the total price of the route, and not relying on the following that cheap tickets will necessarily appear closer to the date of departure. Tourism does not stop, but the cost of air mobility has again become one of the main factors that will determine where, when, and how people will travel this year.