Key facts
- Global airline chiefs are meeting at the IATA summit in Rio de Janeiro.
- Rising jet fuel costs, linked to the Iran war, are a major concern for the industry.
- Shortages of new aircraft from Boeing and Airbus force airlines to use older, less fuel-efficient jets.
- Airlines are attempting to pass higher fuel costs onto consumers through increased ticket prices.
- Travel demand, particularly from premium and corporate travelers, has remained strong.
Global airline chiefs are convening for the International Air Transport Association (IATA) annual summit in Rio de Janeiro, facing significant challenges to the industry's post-pandemic recovery. The ongoing Iran war has driven up jet fuel costs and disrupted airspace, while a shortage of new aircraft from manufacturers like Boeing and Airbus forces airlines to keep older, less fuel-efficient planes in service longer. These factors increase maintenance and fuel expenses. IATA had previously forecast a record $41 billion in net profit for the industry this year, but this outlook is expected to be revised downward. A Deloitte survey of 21 airline CEOs revealed that fuel price volatility and inflation are top industry risks, prompting a focus on cost control. Airlines are attempting to offset higher fuel costs by increasing ticket prices, a strategy that has seen some success, particularly in the United States where domestic fares have risen significantly. Premium and corporate travel demand has remained robust, allowing carriers like Air Canada to pass on costs. However, there are limits to how much fares can be raised before demand softens, especially in regions with weaker currencies or less pricing power. Some airlines, such as Singapore Airlines and Qantas, are still planning for fleet growth by ordering new wide-body jets.