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RIO DE JANEIRO: The global airline industry nearly halved its 2026 profit forecast on Sunday, citing conflict in the Middle East that has driven up fuel costs, disrupted key air corridors and exposed the fragility of a sector operating on thin margins.

The International Air Transport Association, which represents more than 370 airlines accounting for about 85% of global air traffic, said ‌in its annual report ⁠that it ⁠now expects the industry to post a combined net profit of $23 billion in 2026, well below a previous projection of about $41 billion and down from $45 billion in 2025.

The downgrade underscores airlines’ exposure to geopolitical shocks and fuel volatility, even as passenger demand remains resilient, planes are flying fuller and revenues are set to rise to more than $1.1 trillion.

“There are two major factors: one is the significant increase in jet fuel prices, which has gone way higher than I think anybody would have expected, and then the disruption to the airlines in the Gulf region, so that combination has led us to reduce the forecast,” IATA Director General Willie Walsh told Reuters at the group’s annual ⁠meeting in ‌Rio de Janeiro. Walsh said he expects some smaller airlines to go bankrupt or be taken over by bigger carriers this year and next as higher fuel costs bite. U.S. low-cost carrier Spirit Airlines shut down last month, the ⁠first airline casualty of the Iran war.

Airlines are also expected to cut unprofitable routes to protect margins, while fares – which have surged since the start of the Iran war – are unlikely to fall soon, Walsh said.

“In an environment where demand remains pretty robust, but capacity comes down, that will likely lead to a situation where fares will remain elevated,” Walsh said.
FUEL COST SHOCK WIPES OUT HIGHER REVENUES
The Middle East conflict, triggered by U.S. and Israeli airstrikes on Iran, has forced airlines to reroute flights around closed or restricted airspace, adding hours to some journeys, increasing fuel burn and straining already tight capacity. At the same time, oil prices have surged on fears of supply disruption, pushing jet fuel prices sharply higher ‌and widening refinery margins, leaving airlines facing a steep jump in their largest cost.

Gulf airlines such as Emirates, Qatar Airways and Etihad Airways face the greatest operational uncertainty after a near-complete shutdown of regional airspace at the start of the conflict.

Walsh said most regions should remain profitable, though ⁠at lower levels, while Middle East airlines are likely to slip into the red due to the conflict and weaker demand.

IATA expects airlines’ fuel bill to surge to about $350 billion this year from roughly $252 billion in 2025, with fuel accounting for nearly a third of operating costs.

That is eroding profitability per passenger, with airlines now expected to earn about $4.50 per passenger, roughly half last year’s level.

On the upside, IATA expects industry revenues to rise 9.4% to around $1.16 trillion this year, driven by steady travel demand, higher fares, and growing income from extras such as seat upgrades and onboard services.

Aircraft shortages are also squeezing the sector. Delivery delays at Boeing and Airbus are forcing airlines to keep older, less fuel-efficient planes in service for longer, raising maintenance bills and blunting efforts to improve margins, Walsh said.

Thailand is emerging as a significant fintech hub within Asia, driven by high digital adoption rates, strong government backing from the Bank of Thailand, and successful national initiatives like PromptPay. The country is strategically positioned to address the widespread regional fragmentation in financial services by actively developing cross-border interoperable payment systems.

Asia’s fintech sector is rapidly transforming global financial services through innovation, experiencing an unprecedented surge in digital payments, real-time transactions, and decentralized finance. The Asia-Pacific region notably leads in retail cross-border payments, with a projected market value reaching $23.8 trillion by 2032.

Key developments include initiatives like Project Nexus, designed to interlink real-time payment systems across jurisdictions, and the widespread adoption of digital wallets such as Alipay and GrabPay, which dominate online and in-store payments. Despite this growth, fragmentation due to varied regulations and technological discrepancies remains a primary challenge, though policy reforms and collaborations are making progress.

Thailand’s strong foundation for digital finance is evident in its nearly universal financial account ownership (96%) and mobile phone penetration (100%). The Bank of Thailand has been instrumental in fostering fintech startups through regulatory sandboxes. Key milestones in Thailand’s fintech journey include:

• PromptPay: A real-time payment network enabling instant transactions via national IDs, phone numbers, or QR codes, significantly accelerating cashless adoption.
• Cross-border QR payments: Active collaborations with countries like India, Singapore, and Vietnam to establish interoperable payment systems.
• Stablecoin and CBDC exploration: Careful examination of blockchain-powered financial models to enhance efficiency. The country has also attracted substantial investment, with fintech assets under management reaching $28.91 billion USD in 2023.

For Thailand to sustain its competitive edge and overcome regional fragmentation, experts provide several recommendations:

• Foster Greater Collaboration: Actively engage regulators, fintechs, banks, and startups to drive continuous innovation.
• Demonstrate Scalability: Prove the ability to scale beyond the domestic market to attract and retain global investment, especially given market volatility.
• Prioritize Tech Talent Development: Implement progressive educational policies to nurture home-grown talent capable of innovating and solving local challenges.
• Address Challenges: Remain vigilant on cybersecurity, work towards regulatory harmonization, and ensure continued consumer adoption of digital services.
• Balance Innovation and Stability: Crucially manage the pursuit of fintech advancements with the need for financial stability to solidify its position as a fintech powerhouse in Asia.

Thailand is a rising fintech hub with strong adoption and government support. Policymakers should focus on harmonization, talent, and cybersecurity, while investors should prioritize scalable, cross-border, and blockchain-driven opportunities.

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