IATA Annual Review 2026: Reading Between the Lines
IATA recently published an Annual Review 2026¹. It is always fascinating to read; it allows you to reflect and ponder on the processes and trends in the global aviation industry.
As usual, the report contains a lot of views, analyses and data. In this article, however, I would like to focus on what the report does not emphasise — or at least on what it is not drawing attention to.
We are all aware of the controversial policies of the US administration — firstly on tariffs, then in relations with partners and neighbours and later the conflict in the Gulf. All these events affected international air transportation but should have minor consequences for the North American market. However, the data about Air Passenger Markets say otherwise.
Let's start with the capacity. In 2025 the North American markets demonstrated the lowest capacity growth (ASK) at 2.0 % compared with 5.2 % across the industry. The conventional explanation for it refers to delays with deliveries of new airplanes. The forecast was bleak — airlines would have to cut schedules as they are restrained in capacity and cannot serve the network with the required frequencies.
Statistics Canada reported a growth of aircraft movements by 3.1 % in 2025 vs 2024², but still at 95 % of 2019 level movements.
US Travel Association³ reports that domestic travel reached 2019 levels. It should be noted that domestic travel accounts for 87 % of total US air travel. International travel, despite some growth in 2025, did not achieve the 2019 levels. Moreover, there was a certain decline in travel connecting the US and Canada which started in 2025.
It looks like the US domestic market has plateaued and, given the events of 2026 with the growing cost of fuel, demand will contract.
The hypothesis of market saturation is confirmed by the dynamics of the Passenger Load Factors.
The report shows the passenger load factors (PLF) in various regions, and North America demonstrates a decline in PLF for 2025 vs 2019. That may signal that the growth of capacity outpaced demand for air travel. Therefore, delays with deliveries may have helped airlines rather than affected them.
Similarly, the profitability of North American carriers is far from the levels of 2019. While airlines in almost all other regions demonstrated a gradual return to 2019 levels, profitability of US airlines demonstrated much weaker growth. IATA explains it with the headwinds caused by the introduction of tariffs and immigration restrictions. A hike in jet fuel prices in 2026 pushed carriers to increase fares and it will probably help them maintain better profitability when jet fuel prices stabilise. The remaining question is what new headwinds may appear by the time prices stabilise again.
In this market condition, US carriers should be especially careful when pacing long-term plans for fleet growth. We understand that fleet growth plans are a long-term vision and commitment; however, US carriers can use the current challenges OEMs are facing to softly adjust growth plans. Of course, there is an advantage in the better fuel efficiency of new gen aircraft, however it can be realised only with a sound PLF and clear prospects of passenger air traffic.
IATA dedicates a lot of attention to the achievements and plans on the path towards Net-Zero by 2050.
Sustainable Aviation Fuel (SAF) plays a key role in this initiative and IATA reports about achievements in Europe and the UK. However, any reference to achievements in the USA is omitted. The latest updates on SAF in the USA are dated 2023. It seems that after leaving the Paris Climate Accords for the second time in 2025, the USA shelved their plans for the implementation of SAF.
For the first time IATA recognised a fact of competition for feedstock for SAF, which I mentioned as a hypothesis a couple of years ago⁴. At the end of the day, the competition benefits the holders of feedstock but harms the economics of SAF production, as the raw material cost is higher and the cost of SAF for aviation becomes even more burdensome. The idea of coordination and cooperation in the supply of feedstock for sustainable fuel for different industries remains very viable.
Striving to achieve Net-Zero should not be at any cost. Perhaps aviation should exit from this competition for SAF in favour of the other industries (like maritime) and focus on the other areas which can contribute to the movement to Net-Zero — like systemic efforts in shifting airports' energy supply to renewable sources, transfer of airport transport to electric vehicles, better management of congestion for landing and take-off, and organic growth of new gen fleets with maximum utilisation of the existing fleets. Issues with new gen engines taught the industry a hard lesson that rushing with the introduction of the new gen fuel efficient aircraft does not necessarily make us closer to Net-Zero. Limited life on the wing at the end of the day inflicts a net negative effect on the environment — new airplanes are on the ground, and airlines have to operate old gen aircraft (the harm has been done, emissions for manufacturing new airplanes were already made).
Finally, I would like to comment on the most interesting topic — IATA's view on the long-term growth in passenger traffic. The CAGR forecast for traffic growth was reduced from 3.8 % to 3.1 % for 2024–2050, but mainly in recognition of the issues with the deliveries of new fleets rather than clarity for the sources of such growth and the ability of the industry to serve this number of passengers.
RPK is supposed to double in fifteen years' time. Theoretically it can be achieved through the growth of PLF (say by 10 %) and induction of aircraft with higher seat capacity (like a prevailing demand for the A321neo vs the A320neo, which can add another 15 %). However, the growth of RPK should be synchronised with the growth of airport capacity and building new airports. We see some projects for constructing new airports in Asia, but mature markets like the US or Europe would not be able to contribute much to this growth. On the contrary, sustainability initiatives are limiting the capacity of airports (like initiatives in Schiphol and Dublin to reduce the number of night flights) which will create headwinds for growth.
According to different views, business travel has not recovered completely since the COVID-19 pandemic and there is growth potential. Family travel can contribute to the growth with the growth of the number of people who can afford air travel. However, to secure growth in the leisure travel segment, a lot has to be done in the entire tourist industry (new hotels, restaurants, entertainment and recreation capacity).
In aggregate, with the new CAGR the RPK should double by 2050 (while it was 2.5 times growth as per the earlier CAGR metric of 3.8 %). It seems IATA has started to realise that straight linear growth is not something that can be easily achieved.
I understand that IATA (and we) have to be reasonably optimistic about the prospects of growth. Time will show how we cope with the headwinds and what additional reserves for growth will be discovered.
References
- IATA, Annual Review 2026 (PDF)
- Statistics Canada, Aircraft movements, 2025
- US Travel Association, Travel forecasts
- Yuriy Tokarev, SAF — Are We Missing Focus?, LinkedIn