Change of Strategy in Air Transport

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The financial results for 2025 are coming in, and they give a good idea of how the sector is evolving.

European airlines have been doing well over the past year, while the American giants are still struggling somewhat. All in all, 2025 will not have been such a bad year, helped by an average oil price that remained reasonable at around $67 per barrel. Remember that in 2010, analysts expected it to reach $200. This shows that making forecasts, especially in the long term, remains a perilous exercise.

The American giants are showing some signs of weakness. Delta Air Lines’ net profit is down 5% to $3.8 billion. United Airlines’ is reportedly up 6%. However, American Airlines saw its net profit collapse by 87% to just $111 million, on revenue of $54 billion, double that of the Air France KLM group. The latter achieved a real performance by turning all its indicators green, with a net profit of €1.754 billion compared to €489 million the previous year. Its financial indicators, from equity to cash flow, are all improving. The only downside is that its low cost subsidiary Transavia France is still unable to make a profit, and its unit costs remain high for this sector at €6.73 per seat kilometre offered, compared to revenue of €6.64. The Lufthansa Group also achieved a good result, with a 32% increase in profit to €1.93 billion. Only the IAG group saw its profit fall, by 2.3%, to €1.4 billion.

The full results for the sector are not yet known because Gulf carriers and some Asian and African airlines close their accounts on March 31. Nevertheless, the outlook appears favourable.

The fact remains that many hazards can impact air transport activity, and they rarely move in the right direction. In 2025 alone, the shutdown in the USA certainly weighed heavily on the results of the major American carriers, as it occurred during the end of year holiday period. In addition, current or planned conflicts are seriously complicating operations. This is the case for European carriers, which are seeing flight times extended by around two hours on services to Asia following the ban on flying over Siberia and due to the situation in Iran, while Asian carriers do not face the same disadvantages. Furthermore, the thunderous announcements of the American President are at the very least disrupting short and medium term operating plans.

But amid these difficulties, to which one could add the impact of ecological constraints that have heavily penalised companies such as KLM, there are also some grounds for satisfaction.

First, and hopefully soon, the reopening of connections to Venezuela, a large country and an important destination for economic, touristic and family reasons. This will give a boost to South American services, which are in real need of it.

And then the airlines have taken a historic turn. Instead of continuing, as they have done for more than 30 years, to pursue fare reductions, which were often accompanied by a decline in product quality through reduced services and excessive cabin densification, we are now witnessing an improvement in product quality. In fact, the inflection point came with Covid. As soon as this disastrous pandemic ended, operators raised their prices and realised that this did not lead to a decline in demand. They might have suspected this earlier, but better late than never. The momentum has now taken hold. European airlines in particular have all decided to enhance their products. The most spectacular example can be seen at Air France KLM, which, it must be said, had fallen very low. Its policy of upgrading its offering appears beneficial, judging by the significant improvement in its financial results. Customers are willing to pay more for a better product. This is not new, and it is encouraging that airline executives have recognised it.

If this strategy continues, and if geopolitical conditions do not deteriorate during 2026, we can expect a further improvement in results that will make air transport the leading sector in the world, for the good of all.

Aviation, Africa’s Awakening

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If there is one continent that truly needs air transport, it is Africa. The distances to be covered are long, and ground infrastructure is relatively weak and often in poor condition. An additional factor is security, as the continent is still affected by numerous internal conflicts. I would also add that Africa’s growth rate is among the highest in the world and that its very young population is eager for progress. In short, everything is coming together to give air travel a place like no other in the world.

And yet, this sector is still far from maturity. There are many reasons for this. First, there is the resistance of states to opening their airspace in order to protect their national airlines. Signed conventions have often not been respected, despite the triumphant declarations that marked the end of official meetings. Secondly, there is a flagrant lack of capital. Air transport requires significant equity investment, and states, most of which own their national carriers, are often reluctant to finance fleet renewal. We must also mention the corruption that persists in many countries, which limits the proper allocation of financial resources.

It must be acknowledged that until recently, there have been more failures than successes. Major companies have disappeared, in particular Air Afrique, the first multinational airline on the continent, which could not resist the political interference and privileges granted to officials of its member states. South African Airways, the major operator in southern Africa, had to file for bankruptcy before painfully rebuilding itself. Tunisair is struggling to regain stability, as it has been managed by leaders appointed by political authorities without proven competence. Many operators simply disappeared, although some were later rebuilt, including Air Mali, Air Gabon, Air Senegal and Air Seychelles, to name but a few. It is a sobering picture, and yet…

However, African air transport is recovering, and not just marginally. A few leaders are driving this development. Foremost among them is Ethiopian Airlines. Founded in 1945 and initially built with the support of the American carrier TWA to international standards, it has consistently maintained its independence regardless of Ethiopia’s political changes, although it remains entirely state owned. Remarkably managed over the years by successive presidents, it has built a powerful operational platform based on a hub strategy. Today, it is the leading carrier on the continent, expanding not only through its own operations but also by developing a network of subsidiaries, of which the Togolese carrier Asky Airlines is a prominent example.

Others are also waking up, and quite strongly. This is the case for Royal Air Maroc. The airline was initially hit hard by fierce competition after the country signed an Open Skies agreement with Europe, which triggered a surge of European low cost carriers. In response, it created a hub between Europe and Africa in Casablanca and, after a difficult period of adaptation, this strategy is now proving successful. So much so that it has significantly strengthened its fleet, which now totals 67 aircraft, and is showing serious ambitions in the South Atlantic market.

For its part, Egyptair is renewing its fleet. The oldest African airline, founded in 1932, has placed orders for 33 new aircraft. It is still somewhat constrained in attracting certain European markets due to its ban on alcohol on board, but circumstances can evolve quickly. Even Kenya Airways, long underperforming, is in the process of recovery, having posted a profit of 42 million dollars, something that had not happened for years. Air Algérie is likewise engaged in renewing its fleet.

We are also seeing newcomers such as Rwandair emerge. This central African operator does not conceal its ambitions. After developing a medium haul network from its base in Kigali, it is now expanding its operations to Europe with high capacity aircraft.

Governments increasingly seem to understand what air transport can contribute to their economies. The liberalization of African skies is underway. It will take time, but progress appears inevitable. Infrastructure development remains essential. Ethiopia has committed to building a new world class airport, and Rwanda’s new airport is expected to be operational in 2028. Of course, many existing airports still require improvement, particularly Casablanca, which is approaching saturation, but the momentum is now clear. The growth of African air transport will be a major driver of the continent’s development.

The Impasse

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The 5 billion passenger mark will have been passed in 2026. To reach this exceptional level, no fewer than 28,000 aircraft will be needed in service to serve just over 4,000 airports around the world. This volume of traffic is starting to cause serious problems. First of all, sufficient airspace is required, especially in very dense areas such as the United States and Europe. Secondly, it must be acknowledged that air transport is a source of CO2 emissions, even if it represents less than 3% of total emissions. Finally, we must take into account the attitude of populations living near major airports, who find it increasingly difficult to tolerate aircraft flying overhead, even if they are becoming quieter and quieter.

The outlook shows that the management of this activity will be complex over the next 20 years or so. Continued growth of around 4% to 5% per year is expected, which corresponds to carrying 250 million additional passengers each year and putting 1,400 new aircraft into service annually. The challenge is significant, as it is necessary to take into account not only aspects related to safety and security, but also the ever increasing demands of consumers who are less tolerant of delays, lost luggage, or lack of comfort, while at the same time demanding ever lower fares.

We are not far from a dead end. How can we ensure continued demand for air transport while respecting environmental constraints and consumer expectations? Governments will certainly continue to levy taxes, if only to satisfy environmental lobbies and fill their coffers, while imposing compensatory obligations on companies for operational hazards they must endure. How can this squaring of the circle be resolved? It will certainly be necessary to carry more passengers with fewer aircraft, at least through the use of larger, less congested airports.

A first response is provided by the entry into service of a new generation of aircraft derived from widely used models such as the Boeing 737 or the Airbus A320. These are long range versions with lower capacity than the aircraft used until now, which are only profitable when operated on very large routes, feeding major airports that are already difficult to manage given environmental pressures. This new generation, symbolised by the A321XLR with a capacity of 200 passengers and a range of 8,700 km, will be capable of operating profitably on medium demand routes that until now have been consolidated through major hubs, as well as on routes as significant as transatlantic or US coast to coast flights.

But this will not be enough to relieve congestion at major airports. One option is to create gigantic platforms such as Dubai World Central or Al Maktoum International, built to handle 250 million passengers, as well as the new airports in Beijing or Istanbul, which are slightly smaller but nevertheless larger than most older hubs, with capacities exceeding 120 million passengers. However, these large complexes will have to be built far from urban areas, if only to secure the necessary land, such as the 140 km2 required for Dubai World Central. By comparison, the surface area of Paris is 105 km2. It will therefore be necessary to create substantial new ground transport links, which will further impact the environment.

There is another solution, which would be to return very large aircraft such as the B747 or the A380 to service after their withdrawal following Covid. They alone are capable of carrying between 600 and 800 passengers, effectively replacing four aircraft with an average capacity of 200 seats. Of course, these aircraft had supposedly become too expensive to operate. However, in recent years the oil shortage predicted in the 2010s, when a barrel was priced at 125 dollars, has been replaced by relative abundance, with prices falling to around 67 dollars per barrel at recent quotations. As a result, most operators have returned their A380s to service. Not only Emirates, which has always believed in this type of aircraft and whose Sir Tim Clark has been calling for an improved version from Airbus, but also British Airways, Singapore Airlines, Qantas, Qatar Airways, Etihad Airways and even Lufthansa. Only Air France has not taken this step.

And then, to accommodate the additional 4 to 5 billion passengers expected between now and 2040, it will be necessary to design an aircraft capable of carrying between 800 and 1,000 passengers, not over very long distances but on flights of four to five hours, which are likely to multiply.

I hope that manufacturers already have such aircraft on their drawing boards and that the current major airports will be ready to accommodate them.

The Fragilities of Air Transport

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What better recognition of air travel than its success and steady growth since its revival at the end of the Second World War. It has reached 5 billion passengers, $1,000 billion in revenue, around 20,000 aircraft in service, and each new version is more efficient than the previous one, and the outlook is still optimistic despite the many obstacles along the way.

During his speech to the BAR (Board of Airline Representatives) of France, Willie Walsh, the Director General of IATA, pointed out the difficulties that this sector of activity has to face, difficulties that could be overcome with a little goodwill.

A very complex supply chain that is difficult to control.

Aircraft are becoming more and more complex and yet they must be more and more secure. And it is not easy. Indeed, to achieve excellence, you have to call on a multitude of partners, each one a specialist in his or her field. An aircraft manufacturer cannot afford to bring together all the skills in its workshops. He is an architect and a final assembler before delivery to operators. For example, the wings of the Airbus A220, whose program was taken over from the Canadian company Bombardier, were bought from the American company Spirit AeroSystems, which had them manufactured in Ireland. This does not mean that the device is unreliable, quite the contrary. Each of the subcontractors is an expert in its field. However, it may turn out that some defects pass through the controls, which are very numerous. This is what happened to a Boeing 737 operated by Alaska Airlines that lost a fuselage panel in flight. The defect in the assembly of the door was identified at Spirit AeroSystems, which supplied the fuselages to Boeing. However, no fewer than nine checks were carried out on this cell, both by the manufacturer and the operator. Thus, despite the best goodwill in the world and the assistance of the latest technology, a simple forgotten bolt can lead to serious consequences.

European air traffic control needs to be rebuilt.

This is Europe’s default. This small continent, if we consider only its surface, is also divided into about thirty states, each of which is master of its airspace and consequently of its control tools. However, it is enough for one of the control centers to fail for technical or social reasons to disrupt the entire European aeronautical operation. Willie Walsh estimates that the losses caused by flight delays due to air traffic control will be 16 billion euros in 2025. France and the repeated strikes of its air traffic controllers are being blamed. Of course, we could unify the management of the European skies, but each country is reluctant and each government is afraid of social conflicts. In other words, we know how to do it. The SESAR (Single European Sky ATM Research) program has been ready for years and we are doing nothing. However, the most serious estimates show that this would save 8 minutes of flight time on each trip. We expect the ecologists, who are so effective in their lobbying, to support this project with their governments.

Punitive taxation.

How else can we explain this avalanche of taxes that hit air transport. We can see populism showing up behind all these measures taken in general under the pretext of penalizing an activity that is a source of CO₂ production, by directing the large levies not to carry out research that could lead air transport toward zero carbon impact, but by drowning them in general budgets when it is not just to subsidize rail transport. And I am not talking about the delusions of which private flights are the target under the pretext that they are used by privileged people, when in reality the vast majority of them are used to develop economic activities.

An airport route to be rethought.

Willie Walsh did not mention this aspect in his speech, but let us recognize that it is a great source of frustration for passengers. Of course, safety is a major aspect of all public transport. But this concern should apply to all means of transport, including rail or road. This is not the case, and yet attacks have also hit rail transport without security checks being applied in stations, if only because we do not know how to do it. One thing is certain, however. The difficulty of getting to and through airports is one of the reasons for the transfer of a large number of air transport customers to trains, or even cars, for distances of less than 800 km.

Decarbonization requires the use of a new fuel, SAF (Sustainable Aviation Fuel), but this is difficult to produce and very expensive, probably because of its scarcity. This is another obstacle that air travel is facing, and I am not talking about cybersecurity, which will certainly become a major concern in the coming years.

Good luck!