Airline profit margins in Middle East lead globally: IATA

Marie Owen Thomsen, Senior Vice President for Sustainability and Chief Economist at IATA said that net profit margins for the sector remain low at 3.9%.

The Middle East region is recording the strongest financial performance in the global aviation sector, with the net profit margin per passenger expected to near $28 by 2026, compared to about $10 in the closest competing region, Marie Thomsen, Senior Vice President for Sustainability and Chief Economist at the International Air Transport Association (IATA), said.

In an interview with Argaam, Thomsen attributed this superior performance to the operating model of Gulf carriers, which relies on modern, long-haul fleets, in addition to substantial infrastructure investments.

She added that the sector’s net profit margins remain slim at 3.9%, placing the aviation industry among the weakest sectors in terms of profitability across value chains.

The IATA official affirmed that this reality constrains airlines and limits their capacity to build cash reserves or execute long-term growth plans. The industry is caught between suppliers with price controls and consumers who are perpetually seeking the lowest fare.

On the issue of delayed new aircraft deliveries, Thomsen explained that while the impact is universal, some Middle Eastern carriers have been relatively less severely affected. This ought to their reliance on wide-body aircraft such as the A380, which is not widely operated by others.

As for air freight operations, she stated that updated growth figures for the Middle East data are pending. However, she emphasized the region’s prevailing importance as a key global transit cargo hub, thanks to its strategic geography and advanced infrastructure.

Willie Walsh, Director General of IATA, commented that airlines worldwide, are facing significant pressure due to monopolistic practices by some suppliers

For his part, while speaking to Argaam, Willie Walsh, Director General of IATA, clarified that global airlines, including those in the Middle East and Africa, face intense pressure from monopolistic practices by certain suppliers, particularly in the engine maintenance sphere. He argued that these practices contribute to an unjustifiable rise in operating expenses (opex), at a time when airlines are grappling with a low global profit margin of no more than 3.9%.

Engine manufacturers such as GE Commercial Engines, according to Walsh, generate around 75% of their revenues from aftermarket services rather than manufacturing — a segment he described as having the highest degrees of contractual restrictions.

Accordingly, he called for a global investigation through IATA to assess the compliance of these practices with competition laws.

He pointed out that these challenges come at a time when airlines are struggling to renew their fleets due to rising costs. This forces them to operate older and less fuel-efficient aircraft, which in turn increases opex and weighs on airlines’ profitability.