IATA: Payment costs swallow $24.5 billion from airlines, squeezing profits
Airlines globally incurred $24.5 billion in payment costs on $1.05 trillion in sales in 2025, highlighting the growing financial burden of processing passenger transactions. The post IATA: Payment costs swallow $24.5 billion from airlines, squeezing profits appeared first on Nairametrics .
In 2025, the global airline industry incurred $24.5 billion in payment costs, a figure that highlights the mounting financial strain on airlines from processing passenger transactions, according to a report by the International Air Transport Association (IATA). Payment costs surged faster than airline sales between 2023 and 2025, exacerbating the challenges faced by an industry notoriously characterized by high operating expenses and slim profit margins.
The IATA noted that the cost of payment processing rose by 10.4% in 2025, significantly outpacing the 7.7% growth seen in airline sales over the same period. This trend, IATA's analysis suggests, is unsustainable despite technological advancements.
The majority of airline payment expenses were attributed to transaction fees, with card payments incurring the highest fees at 2.53%, compared to the estimated average of 1.97% across all payment methods. Conversely, some of the most cost-effective payment options boasted fees as low as 0.01%. IATA's research revealed that approximately one in five attempts to purchase ancillary services, such as in-flight purchases, failed due to declined initial payments, with no alternative payment method offered.
The association is urging airlines to expand the selection of payment methods available to passengers, including digital wallets and local instant payment solutions, as passenger preferences shift away from traditional card payments. IATA's 2025 Global Passenger Survey indicated that 29% of travelers favor digital wallets, while 8% prefer local instant payment options.
IATA is also collaborating with airlines and corporate clients on a novel approach to corporate travel payments as part of the industry's transition to its Offers and Orders model. This initiative aims to enhance payment efficiency, streamline reconciliation, and provide more comprehensive transaction data. Additionally, the IATA has established an Airline Payment Framework – Management Foundation to assist airlines in aligning their commercial, financial, and operational priorities when selecting payment options.
The executive highlighted that offering passengers a broader range of payment choices could aid airlines in reducing processing costs and recovering revenue lost through declined transactions. In Nigeria, the domestic aviation industry confronts similar profitability pressures, grappling with high operating costs, fluctuating aviation fuel prices, and a myriad of taxes and charges impacting airline finances.
The official called for the standardization of aviation charges and the substitution of percentage-based ticket sales levies with fixed charges.
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