IATA Reports $24.5 Billion in Payment Costs for Airlines by 2025

The International Air Transport Association (IATA) has provided fresh insights into the escalating financial strain that airlines will experience due to payment processing costs. By 2025, airlines around the world will incur a staggering $24.5 billion in payment expenses while processing an impressive $1.05 trillion in sales.

Steep Rise in Payment Costs

This figure marks a significant 10.4% increase in overall payment costs from 2023, far surpassing the growth of the travel sales, which are expected to rise only by 7.7%, up from $977 billion recorded in 2023.

For each passenger transaction, airlines will incur an average cost of $5. In comparison, IATA forecasts a net profit of only $4.50 per passenger for airlines in 2026, indicating a challenging financial environment.

The Growing Burden of Transaction Fees

“The airline industry is highly competitive, capital-intensive, and operates on thin margins. In this context, every dollar counts,” said Sandrine Le Borgne, IATA’s Interim Director General and CFO. She emphasized that the rapid rise in payment transaction costs, outpacing industry revenues, cannot continue sustainably. Despite advancements in technology, the airline industry urgently needs to enhance cost efficiency.

A deeper analysis of the projected $24.5 billion in payment costs reveals several contributing factors:

• Payment Fees: A staggering $20.7 billion, or 84.5% of total costs, relates directly to transaction fees.
• Operating Expenses: Approximately $2.9 billion (11.8% of the total) stems from operational costs, such as payment systems management, staff, compliance, and delayed cash flows.
• Fraud Losses: About $0.9 billion (3.7% of the total) is attributed to fraud or sales that could not be collected.

Moreover, card payments bear the highest transaction costs, averaging 2.53%, which is above the general average of 1.97%. The least expensive payment options are as low as 0.01%.

Seeking Cost Efficient Solutions

To combat these rising costs, IATA is thoroughly exploring various solutions aimed at streamlining payments for airlines:

• Alternative Payment Methods: IATA is keen to introduce lower-cost payment solutions for passengers. Their 2025 Global Passenger Survey noted that 29% of travelers prefer digital wallets, while 8% favor local instant payment methods.
• IATA Pay and IFG: Services like IATA Pay, which supports local instant payments, have already launched in 34 countries with 38 payment systems, while IATA Financial Gateway (IFG) empowers airlines to manage and oversee payment processes across more than 170 countries and over 300 different methods.
• Transparency in Agency Card Usage: The Transparency In Payments initiative allows airlines to evaluate and define their payment policies, aiding them in making informed decisions about whether to accept agency cards.
• Corporate Travel Improvements: By working closely with airlines and corporate clients, IATA is exploring modern corporate travel payment strategies that aim to enhance efficiency, ease reconciliation, and provide richer data.
• Evaluation of Payment Strategies: The newly created Airline Payment Framework will help airlines align their commercial, financial, and operational objectives, ensuring payment processes bolster both customer experience and financial health.

“In addition to seeking cost efficiencies, our research indicates that offering passengers diverse payment options could drive revenue growth,” Le Borgne stated. The IATA found that nearly one in five attempts to purchase additional services fails because the initial payment was declined. Providing more payment alternatives could help airlines recover lost income that could otherwise go unaccounted for.