Interactive
Our air traffic forecast is a comprehensive, forward-looking tool that incorporates macroeconomic growth, disposable income trends, and fuel costs. Extending to 2040, the forecast reflects the growing importance of strategic planning in an industry increasingly shaped by sustainability goals, market forces, and an emerging multipolar geopolitical landscape.
The war in Iran and other conflicts in the Middle East have introduced significant uncertainty into the near- and medium-term demand outlook. We’re adjusting the frequency of our updates in response.
Key findings
Air travel demand has remained surprisingly resilient despite rising fares and continued airspace disruptions. Although the ongoing crises in the Middle East and a weaker macroeconomic outlook have slowed demand growth, passenger volumes have held up better than fare increases of this scale would historically suggest. As a result, global revenue has risen substantially even as growth slows.
Demand outlook
The Middle East conflicts have lowered the long-term demand trajectory, with the effects compounding through 2030 (see first chart above).
- This year, global revenue passenger kilometers (RPK) are projected to increase by just 1.76% over 2025 levels, well below the 5.1% year-over-year growth previously forecast before the war in Iran began in February.
- The gap is widest around 2030. Demand is now projected to reach roughly 129% of 2019 levels vs. 138% in the pre-crisis forecast. The difference reflects several years of slower growth accumulating rather than a single large decline in demand.
- The slowdown aligns with the broader macroeconomic outlook. IMF global growth projections have been revised down to 3% in 2026 and approximately 3.1% by 2030.
Higher fares, resilient demand
Typically, large fare increases would be expected to reduce travel as price-sensitive passengers cut back, but that response has been more muted in the current environment. Even though higher fares have raised airline revenue, elevated fuel and operating costs continue to pressure margins and weigh on profitability. As a result, the increase in revenue isn’t leading to proportional profit gains.
This is visible across the largest markets. Revenue per passenger kilometer (RRPK) has increased in 12 of the 15 largest country-level markets (see fourth chart above). Passengers are paying more per unit of travel, while demand across these markets has remained broadly resilient. Whether this resilience is specific to the current environment or reflects a longer-term change in price sensitivity remains to be seen.
Regional and corridor effects
The regional data shows that this relationship holds even in markets facing greater pricing pressure. North America has seen the largest fare increases, with intraregional fares rising by roughly 30%, yet RPK has declined by only around 2%. Fares between North America and Europe and between North America and Asia have also increased on a percentage basis in the low teens, with a relatively limited demand response. Europe and Asia intraregional routes provide a useful contrast, with more modest fare increases alongside continued demand growth.
The differences in the magnitude of increases across fares and revenue generated per passenger kilometer reflect how airlines manage fuel-price exposure. European airlines typically hedge against fuel-price increases, while US airlines don’t, leaving them more directly exposed to changes in fuel costs. The North American market is therefore notable not simply because fares have risen more sharply but because the increase has produced a much smaller reduction in travel than the scale of the price change might suggest.
Model limitations
Our model assumes that demand will find supply—an assumption that may not hold for certain routes over short periods. The model may not fully capture local supply shocks, currently driven by airport closures, jet fuel constraints, and proactive schedule reductions.
Projected market and financial information, analyses, and conclusions are based (unless sourced otherwise) on external information and Bain & Company’s judgment. They are intended as a guide only and should not be construed as definitive forecasts or guarantees of future performance or results. No responsibility or liability whatsoever is accepted by any person, including Bain & Company, Inc., or its affiliates and their respective officers, employees, or agents, for any errors or omissions.