10 Predictions for the Airline Industry in 2025
Back in December 2023 we took a temperature read on the industry, summarising industry leaders’ thoughts on the challenges ahead. It’s fair to say that many of the predictions have come to fruition in 2024 – continued supply chain woes, a focus on revenue optimization and the use of AI ramping up.
Now, OAG’s Chief Analyst John Grant shares his new predictions for the airline industry in 2025 - including one that came true earlier than expected! Let’s see what our resident aviation expert thinks about airfare rises, mergers and acquisitions, progress toward aviation sustainability and more...
1) Airline Capacity Challenges Will Continue Into 2025
The capacity challenges of 2024 will continue into 2025 and indeed through to 2026 as airlines struggle with the fallout from MRO (Maintenance, Repair, and Overhaul) issues and production delays from major aircraft manufacturers. Expect capacity to grow by between 3-4% during the year and any more will be a pleasant surprise.
2) Corporate Travel Demand Will Continue Slow Recovery
The demand for air travel will generally remain strong, and the pre-pandemic normal travel patterns will resume. However, the surge in “revenge spending” is over. Corporate travel demand will gradually recover, compensating for any loss driven by the revenge spend travellers. Therefore, we expect global load factors in 2025 to broadly remain at similar levels to 2024.
3) Average Airfares Are Unlikely to Fall In 2025
Despite the price of oil falling to one of its lowest since September 2018. In 2025, average airfares are unlikely to fall significantly, as that balance between supply and demand remains crucial (sorry travellers). Shortages of supply, rising operational costs, along with a strong US Dollar will impact any scope for dramatic reductions.
4) Long-Range Single Aisle Aircraft Unlock Exciting New Routes
New technology and the expansion of long-range single-aisle aircraft will lead to a series of new routes being launched to smaller market pairs. Likely regions for development are the North Atlantic, South and Central Asia which should lead to exciting announcements later in 2025.
5) AI to Boost Airline and Airport Efficiency
Airports and airlines will increasingly use AI in their operations as they seek to drive further efficiency and reduce cost. easyJet are trialling remote contact pier (air bridge) connectivity at London Gatwick, which potentially could save time, resources and shorten turnaround times.
6) Progress (Mostly) for Airport Facilities Worldwide
7) Korean Air and Asiana Merger to Go Ahead?
The world’s longest planned merger between Korean Air and Asiana may finally get all the necessary regulatory approvals cleared and take shape, with some network adjustments and rescheduling of “wing tip’ long-haul services a place to start.
(UPDATE: This prediction came true after the original date of this blog's publication, and was announced on December 12th!)
8) eVTOL Aircraft to Take Flight in California?
Commercial eVTOL (Electrical Vertical Take-Off and Landing) services are likely to launch in California. While not a replacement for large commercial jets, these four- passenger aircraft are set to improve connectivity to scheduled airlines at the major airports across the state.
9) Europe To See At Least One Major Merger, Acquisition Or Takeover
Airline mergers, takeovers, and acquisitions will be on the cards in 2025 with at least one major transaction expected to take place in Europe and the continent’s big three legacy airlines all showing interest.
10) Some Governments May Have To Soft U-Turn on Sustainability Regulations
Airlines, airports and all parts of the aviation industry will continue the drive towards sustainable operations. Meanwhile, regulators will find new ways to either excessively tax the sector or place capacity caps on movements or noise, without realising the economic impact of such measures. Some Governments may even be forced into “soft U-turns” as they realise the damage of their thinking.
Time – and the data – will tell whether these predictions come true...