Geneva: A weaker US dollar is anticipated to enhance the profitability and margins of airlines not based in the US by lowering costs denominated in US dollars, such as fuel, aircraft leases, and maintenance, according to the International Air Transport Association (IATA). The Geneva-based organization highlighted that 55 to 60 percent of global airline costs are in US dollars, compared to 50 to 55 percent of their revenue.
According to BERNAMA News Agency, a depreciation of the US dollar by one percent against global currencies could boost global airline profits by about one percent and improve operating margins by approximately 0.05 percentage points. IATA’s sustainability and chief economist, Marie Owens Thomsen, noted that fuel efficiency gains are projected to be around one percent due to ongoing supply chain issues, which are hampering fleet renewal and pushing the average aircraft age to over 15 years, the highest ever recorded.
Industry growth is expected to result in an increase in fuel consumption to 106 billion gallons in 2026, up 2.7 percent from 103 billion gallons in 2025, according to Thomsen at the IATA Global Media Day. The consensus forecast suggests a decline in Brent crude oil prices to US$62 per barrel, while jet fuel prices are expected to drop by only 2.4 percent, from US$90 per barrel in 2025 to US$88 per barrel in 2026, as the crack spread widens.
Thomsen further explained that fuel costs will account for 25.7 percent of total operating expenses, decreasing from 26.8 percent in 2025. Additionally, the cost of sustainable aviation fuel (SAF) purchases is projected to increase to US$4.5 billion in 2026, with an estimated availability of 2.4 million tonnes of SAF.
On the supply chain front, Thomsen remarked that ongoing challenges are limiting airlines’ capacity to meet consumer demand for air travel. Although some improvements are expected by 2026, the backlog of aircraft orders is likely to grow. High load factors and stable yields are partly due to these supply chain constraints.
Despite the anticipated increase in aircraft deliveries in 2026, the rate of new orders surpasses production, causing the backlog to reach unprecedented levels. This signals that supply constraints and their financial implications will continue well beyond the short term, impacting airline profitability, Thomsen concluded.