Mixed fortunes for the Middle East despite rising profits

IATA projects Middle East carriers will post a net profit of $5.9 billion in 2025, up from $5.3 billion in 2024. While that makes the Middle East the third most profitable region in the world in absolute terms, its carriers notably generated the highest profit per passenger of $23.1 in 2024 – expected to rise to $23.9 in 2025. This is more than double the $10.3 profit per passenger made by North American carriers.

“The region continues to be very positive around the outlook for 2025, but that does mask the fact there will be certain parts of the region that will continue to be very heavily impacted by what is happening in Gaza and Lebanon,” said IATA director general Willie Walsh, speaking in Geneva on December 11 at the IATA global media day.

“I think it’s been a surprise that it’s not impacted everyone in the region,” he added. “It seems to be localised to carriers in and around that area. It has clearly impacted, particularly on tourism in the region. But the big Middle East hubs don’t appear to be impacted by it and continue to grow in terms of their traffic.”

That strong performance by the big Gulf hub carriers is in part driven by another ongoing conflict, the war in Ukraine and the related ban on overflying Russian airspace facing many European and some Asian operators. That has driven increased demand from Europe for traffic connecting through the Middle East hubs.

The big Gulf connectors have also helped fill a gap resulting from still to be restored capacity between China and the USA. “When we look at traffic flows, we can see a big increase in traffic flowing from the US over the Middle East into Asia and vice-versa,” said Walsh.

He also highlighted a “very strong” premium leisure market that has supported yields – IATA says the Middle East was the only region to increase yields in 2024 – as well as the strong cargo performance, which has enjoyed a fresh upturn amid challenging conditions for maritime cargo and booming e-commerce in China.

“While it [the conflict] is impacting parts of the Middle East, we still think the prospect of growth in the region remains quite robust. But its principally around the major hubs in the Middle East,” said Walsh.

Middle East carriers lifted capacity 10 per cent during 2024 and plan similar growth of around nine per cent in the 12 months ahead – the highest level of growth of any region bar Asia-Pacific airlines, which remains in catch-up mode.

These growth ambitions though are at risk from continued supply chain challenges – an ongoing global issue Walsh says airline leaders have lost patience with and is curtailing the industry’s ability to fully tap travel demand.

“It impacts on everybody, but I think it’s fair to say that the Middle East is impacted more than most because of the significant growth plans that some of the carriers in the region have,” said Walsh.

While frustrations are high around supply chain challenges, and risks remain – chiefly around a spreading of existing conflicts, potential trade wars stemming from the new Trump administration and a failure in expected lower oil prices materialising – the forecast improvement in Middle East airline profits is in line with the global picture.

IATA sees all regions lifting their financial performance amid lower oil prices and steady economic growth, as global net profits climb $5 billion to reach $36.6 billion. That is based on airline revenues topping $1 trillion for the first time in 2025 and growth of almost seven per cent to take total passenger numbers past five billion.