IBA forecasts 25% increase in airline RPKs by 2030

Revenue Passenger Kilometres (RPKs) are predicted to increase by 25.6% between 2025 and 2030,according to data recently revealed by IBA, the leading aviation market intelligence and advisory company.

In its January 2025 Market Update webinar, IBA’s experts forecast that RPKs will rise from 9.5 trillion in 2025 to 11.9 trillion in 2030 – an expected average annual growth of 4.7%. This follows a new record high in 2024, as RPKs exceeded 9 trillion for the first time, marking a 10.1% increase on pre-pandemic levels in 2019.

However, IBA warned that some economic and supply headwinds will temper growth.

Strong growth drivers, but currency and geopolitical concernsIBA predicts that a key airline growth driver will be a slow easing of inflation as food and energy prices decline but services will remain high. Many economies have already met or exceeded inflation targets, with further reductions expected through 2025 and 2026, returning closer to pre-pandemic levels. Global GDP growth is forecast to remain steady at 3.3% throughout 2025 and 2026, with India leading at 6.9%. The US is expected to start at 2.8%, easing steadily to 2.4% for 2025, supported by robust consumer spending driven by a resilient job market and the significant contribution of the services sector. Europe will continue to lag but is showing improvement over 2024.

China’s GDP is predicted to reduce from 4.9% in 2024 to 4.7% in 2025 due to its ongoing restructuring efforts, persistently high debt levels, and a stagnant real estate market. Meanwhile, Japan and Argentina, two of the weakest performers in 2024, are expected to rebound, with forecast growth of 1.5% and 3.6% respectively.

The outlook for oil prices is also positive, as fundamentals suggest that supply will outpace demand in the short to medium-term, keeping prices under control. However, geopolitics remain a strong risk.

IBA warned the strengthening US dollar remains a major concern as it could hamper US exports, strain emerging markets, and significantly impact non-US airlines, which rely heavily on the currency for fuel, aircraft, maintenance and lease payments.

The political landscape following the 2024 elections could also lead to greater protectionism, isolationism, and potential trade disputes. Tariffs on Chinese and EU imports may aim to reduce trade deficits and promote domestic manufacturing but could also increase costs and hinder trade. Despite this, US consumer spending and the strong US Dollar are expected to boost trade overall.

Industry supply challenges remainIBA has revised downwards from its 2024 aircraft delivery forecast, with a delay in a full recovery to 2018’s peak delivery levels until early 2027. Total aircraft deliveries fell by 10%, dropping from 1,420 aircraft in 2023 to 1,265 in 2024. Boeing was the primary driver of this decline, experiencing a significant 35% reduction in deliveries. Delays in aircraft deliveries have resulted in operators maximising fleet daily utilisation across all age groups. According to IBA Insight, the utilisation of mature passenger narrowbodies rose significantly by 5.7% for aircraft aged 15–20 years and 7.4% for those aged 20–25 years, compared to 2018 levels.

Aircraft retirements remained tight during this period based on the last day of service. The total percentage of passenger aircraft retired, relative to the active, parked, or stored fleet, has decreased from 2.2% in 2019 to just 0.4% in 2024, reflecting the ongoing trend of operators holding onto aircraft longer in response to supply challenges.

IBA reports an encouraging improvement in freighter activity, with the number of inactive aircraft decreasing 5% by the start of 2025 compared to Q2 2024. Similarly, passenger aircraft storage levels remain low, with a modest decline from 11.8% in Q1 2024 to 10.8% in Q1 2025. During the same period, the total number of stored passenger aircraft saw a significant 19.3% drop from 1,746 to 1,409.

Value and lease rate impactThe delays in aircraft deliveries, on both narrowbody and widebody fleets, combined with latest generation narrowbody engine issues, have positively affected market values and lease rates.

IBA forecasts continued growth in new-generation narrowbody aircraft values through 2025, driven by the slow supply recovery and inflation. The A320-200neo and B737 MAX 8 are on equal ground, with values of new models both projected to rise 4.1% from US$55.5 million in October 2024 to US$57.8 million by January 2026. Meanwhile, the A321-200neo is predicted to increase by 3.4% to US$66.4 million over the same period. The A220-100, A220-300, E195-E2, and E190-E2 models will also likely see gradual value increases.

Data from IBA Insight shows that new narrowbody aircraft lease rates stabilised in 2024, and IBA anticipates further growth in 2025 due to tight supply. Lease rates for new examples of the A320-200neo and B737 MAX 8 are expected to increase by 4.5% to US$418,000 by January 2026, while the A321-200neo lease rate is predicted to rise by 6.1% to US$487,000 per month. Lease rates for older models are expected to remain broadly stable through 2025 and 2026.

The tightness of aircraft supply has driven up the proportion of aircraft lease extensions and IBA predicts that 75-80% of leases will be extended through 2026, although this figure is then expected to decline to the long-term trend by 2030 as aircraft deliveries accelerate. Lease extensions relative to transitions rose to 80% once again as scheduled lease ends and early terminations decreased by around 17%. New-generation widebody values are being driven upwards, fuelled by the slow recovery of aircraft supply. Backlogs are extending while demand has continued to strengthen. The A350-1000 exemplifies this trend, with IBA projecting a 2.1% increase in its market value from US$176.2 million in October 2024 to nearly US$180 million by January 2026.

In the mature widebody segment, A330ceo lease rates continue to grow, driven by recovering APAC traffic and constrained supply. The monthly lease rate for a 12-year-old A330-300 is projected to increase by 6% from US$351,000 in October 2024 to US$372,000 by January 2026. Similarly, IBA forecasts that the ongoing absence of the Boeing 777X will further boost lease rates for the 777-300ER, with a 4% rise expected for a 12-year-old model from US$452,000 in October 2024 to US$470,000 by January 2026.

Airline capacity growing, but yields less robustIBA Insight reports that operators significantly increased capacity in 2024, with Available Seat Kilometres (ASKs) rising 9% from 2023 levels. Europe & CIS and Asia-Pacific (APAC) were the primary regions which drove this growth. United Airlines led the way, reporting 507 billion ASKs, a 7% increase year-over-year. In 2025, operators are expected to further expand capacity, with Q1 2025 ASKs predicted to grow by 5.6% compared to Q1 2024. The primary contributors to this growth are the Latin America and APAC regions, with forecast increases of 8% and 7%, respectively, over the period. In contrast, ASKs in the Middle East have declined by 3% over the past 12 months. IBA also revealed that airlines boosted capacity by both growing their fleets and improving aircraft utilisation compared to pre-pandemic. The average fleet size grew by 5.9% from 2019 to 2024 while aircraft utilisation improved 13.1% over the same period. Additionally, the number of routes increased by 5.5% but there was a slight (0.7%) lag in average aircraft size.

The positive capacity outlook for 2025 is likely to be tempered by declining yields across most markets. The global operating margin is expected to have dropped from 8% in 2023 to 7% in 2024, and IBA forecasts it will decline further to 6% in 2025.

IBA’s Operator Score Index (IBA OSI) indicates a slightly higher level of global airline risk for 2024. Evaluating financial and operational factors such as financial performance, fleet structure, and operational efficiency, along with qualitative data, the Index has a global weighted average score of 68% for 2024, down marginally from 69% in 2023, indicating a modest decline in overall airline operational performance.

Sustainable Aviation Fuel (SAF) mandates and production capacity growing, with higher fuel prices forecastIBA Insight reports a significant expansion in SAF production capacity in the Americas, with it projected to reach 6.6 million metric tonnes per year (MT/yr) by 2025, and circa 12 million MT/yr by 2030, supported by the first global Alcohol-to-Jet plant in Georgia and the Clean Fuels Tax Credit Programme, providing subsidies to SAF production. In Europe, SAF rollout is limited by feedstock availability. Capacity is still projected to quadruple from 0.5 million MT/yr in 2024 to 2.2 million in 2025, but the region’s longer term growth projections are more modest.

In APAC, Neste’s 1 million MT/yr facility in Singapore will give the region the highest SAF capacity globally coming into 2025, with total production projected to grow from 3.29 million MT/yr in 2024 to 4.2 million this year. China’s 2% SAF blending mandate begins in 2025, with a projected demand of 0.8 million MT, while Europe’s 2% fuel blend mandate will generate a demand of 0.6 million MT.

Meanwhile, IBA reported that Europe is facing higher fuel prices in the short term due to regulatory changes. As a result of regulatory policies, The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), the EU Emissions Trading System (EU ETS), and the EU Sustainable Aviation Fuel (SAF) mandate, average fuel prices segmented by compliance are projected to rise by 8% from €1,212 per tonne in 2025 to €1,310 per tonne in 2030.