Prime Minister Narendra Modi participated in the ongoing 81st Annual General Meeting (AGM) of IATA (Photo: WTTC)
The participation of Prime Minister Narendra Modi in the ongoing 81st Annual General Meeting (AGM) of the International Air Transport Association (IATA), being held in Delhi on Day 2 lent political heft to the global aviation meet. In his key note address, Modi invited global aviation companies to enhance their investments in India, which is already the world’s third largest domestic aviation market and one of the fastest growing ones around the world.
Willie Walsh
Earlier, the second day of the conference began with a high-profile press conference led by Willie Walsh, Director General of IATA, and Pieter Elbers, CEO of IndiGo, who offered a comprehensive outlook for global aviation in 2025.
The press conference set the tone for a day of candid reflection and forward-thinking strategy. Walsh and Elbers acknowledged that while the industry has made significant progress rebounding from the pandemic’s disruptions, profitability remains a central concern. Asia-Pacific carriers, for instance, are forecast to achieve a USD 4.9 billion profit in 2025, a slight improvement over 2024, but with net profit margins lingering at a modest 1.9 pc. This reality underscores the ongoing struggle to balance surging demand, particularly in North Asia, where China alone accounts for nearly 40 pc of regional traffic, with the high costs and competitive pressures that define the sector.
Pieter Elbers
A key theme running through the AGM was the socio-economic significance of aviation, particularly in North Asia. The region’s aviation industry is a formidable economic engine: in 2020, China’s aviation sector generated USD 243.6 billion in GDP and supported 10.2 million jobs. Hong Kong’s aviation industry contributed a remarkable 10 pc to its GDP, while Chinese Taipei saw approximately USD 30 billion in economic benefits and nearly half a million jobs linked to aviation. Mongolia, celebrating a century of flight, reported robust growth in international passenger numbers, even as the region as a whole continues its journey back to pre-pandemic levels.
The media briefing led by Marie Owens Thomsen, Senior VP Sustainability and Chief Economist, IATA reinforced the centrality of sustainability and economic resilience to the industry’s future. Thomsen emphasised that over 70 pc of the industry’s revenue is derived from the passenger side, highlighting the importance of restoring and growing passenger volumes. She also discussed the urgent need for the aviation sector to rely on Sustainable Aviation Fuel (SAF) production to meet its decarbonisation goals.
“We strongly believe that the future of aviation must rely heavily on the production of SAF. The key challenge facing the world is how to replace fossil fuels with cleaner alternatives. For airlines, this alternative must remain a liquid fuel until technologies like hydrogen or electric propulsion become viable for commercial flight. As long as jet engines are in use, SAF is the most practical solution for reducing carbon emissions, and we estimate that around 60-63 pc of our decarbonisation efforts by 2050 will need to come from these fuels,” Thomsen tells India Outbound.
“What is remarkable is that the technology to produce SAF already exists, and the investment required is similar to what was needed for solar and wind energy. These are “drop-in” fuels, meaning they can be used with current infrastructure without costly changes. Yet, despite this readiness, SAF is not being produced at scale, largely due to a lack of supportive policy from regulators. Policymakers must prioritise renewable fuels, especially SAF, to accelerate aviation’s decarbonisation,” she adds.
Marie Owens Thomsen
North Asia is making tangible progress in this arena and mainland China’s SAF production capacity reached or exceeded one million tons in 2025, with projections to surpass two million tonnes next year. The Chinese regulator has set a usage target of 20,000 tonnes for 2025, aiming for 50,000 tonnes between 2021 and 2025, while Hong Kong and Taipei are also advancing SAF initiatives.
Xie Xingquan, Regional VP for North Asia, IATA provided a detailed status update on the region’s aviation sector. He noted that strong demand continues, with Revenue Passenger Kilometers (RPK) in North Asia expected to grow at 9 pc, far outpacing the global average. Visa relaxations in China and other Asian countries have spurred a surge in international travel, with Shanghai alone recording a 55 pc year-on-year increase in international passengers.
Yet, the region faces significant headwinds. Escalating global trade tensions have impacted the air cargo market, particularly with recent suspensions of postal parcels from mainland China and Hong Kong to the United States.
Digital transformation was another focal point of the day. According to IATA, North Asia is at the forefront of implementing IATA’s 1ID biometric system, with airports in Hong Kong, Beijing and Shanghai adopting facial recognition technologies to streamline passenger journeys.
A successful proof-of-concept project between Hong Kong and Narita Airport in Japan demonstrated the potential for cross-border interoperability. In air cargo, the IATA One Record initiative is revolutionising supply chain data sharing, with over 30 companies in mainland China piloting the system across 10 airports. The adoption of digital credentials and digital currency settlement systems is expected to further reduce the industry’s global payment and distribution costs, which currently total USD 60 billion.
The media briefing also discussed that despite these advancements, the industry continues to grapple with supply chain disruptions, overcapacity and profitability pressures. Chinese airlines, for example, face extended lead times for spare parts, now averaging over 100 days and rising maintenance costs, with 150 aircraft grounded as of mid-May 2025 due to engine issues. While domestic competition remains intense and overcapacity persists, Chinese carriers are exploring new international markets, particularly in Central Asia and Europe, to diversify revenue streams and alleviate these pressures.
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