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Aviation Market to Soar Above Turbulence? ETFs to Consider
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While supply-chain challenges, tariff uncertainty and geopolitical issues threaten to dampen investor confidence in the aviation sector, expectation of improved profitability and lower jet fuel costs compared to 2024 are helping to lift the industry's outlook.
Despite lingering concerns, the overall sentiment remains optimistic, making the industry worth investor attention. Even Willie Walsh, Director General of the International Air Transport Association (IATA), shares this sentiment, expecting 2025 to shape up better for airlines than 2024, though still slightly below IATA’s earlier projections.
Breaking Down the Data
According to a report by IATA, as quoted on CNBC, the aviation industry’s net profit is expected to climb to $36 billion in 2025, rising from $32.4 billion in 2024, falling short of the $36.6 billion estimate made in December 2024. Improvement in net profit margin is also anticipated.
Total revenues for the year are expected to reach a record high of $979 billion, just shy of the previous forecast of $1 trillion, marking an increase of 1.3% from 2024. According to IATA, passenger revenues are projected to reach an all-time high of $693 billion this year, increasing 1.6% from 2024, supported by an additional $144 billion in ancillary revenues.
The main driver of the optimistic outlook, jet fuel costs are expected to average $86/barrel in 2025, falling from $99 in 2024, resulting in approximately $25 billion in jet fuel cost savings from 2024. Per IATA, as quoted on CNBC, fuel prices are not expected to be affected by ongoing trade tensions.
Another significant contributor to the improved outlook of the aviation industry is efficiency. Passenger load factors are expected to reach a record high in 2025, with a full-year average of 84%.
Beyond Financials
Robust passenger demand in the Asia-Pacific region, which is also the fastest-growing region, is a tailwind for the aviation industry. Eased visa policies across Asia-Pacific economies, especially China, Vietnam, Malaysia and Thailand, help in the optimistic outlook, boosting both international and regional travel.
The Middle East also lends a helping hand, generating the highest net profit per passenger globally. Meanwhile, Europe is expected to benefit from strong passenger demand, fueled by continued growth in the low-cost carrier segment, according to IATA. Additionally, a strong Euro compared to the greenback also boosts the region’s profitability.
However, delays in aircraft deliveries and a shortage of aircraft and aircraft components remain a common theme across regions.
Possible Headwinds
While the outlook for the aviation market is optimistic, some headwinds remain. So, investors should carefully consider and remain aware of.
The most significant challenge facing the industry is the supply chain. According to IATA, these challenges have had a substantial negative impact on airlines — pushing up leasing costs and increasing the average age of aircraft fleet.
ETFs to Explore
Amid rising concerns over a projected slowdown in global economic growth, the aviation industry may stand out as a bright spot, offering investors a measure of reassurance.
Investors can consider U.S. Global Jets ETF (JETS - Free Report) and Themes Airlines ETF (AIRL - Free Report) to capitalize on the aviation industry’s optimistic outlook.
With a one-month average trading volume of about 2.71 million shares, JETS is the most liquid option, offering investors easier entry and exit while minimizing the risk of significant price fluctuations, which is ideal for active trading strategies.
JETS is also the largest fund out of the two, having gathered an asset base of $857.3 million. Regarding charging annual fees, AIRL is the cheapest option, charging 0.35%, more suitable for long-term investing. AIRL also has a Zacks ETF Rank #1 (Strong Buy).
Performance-wise, compared to SPDR S&P 500 ETF (SPY - Free Report) , both funds have performed well over the past fund, with JETS and AIRL gaining 14.36% and 16.09%, respectively. SPY has added 6.28% over the same period.
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Aviation Market to Soar Above Turbulence? ETFs to Consider
While supply-chain challenges, tariff uncertainty and geopolitical issues threaten to dampen investor confidence in the aviation sector, expectation of improved profitability and lower jet fuel costs compared to 2024 are helping to lift the industry's outlook.
Despite lingering concerns, the overall sentiment remains optimistic, making the industry worth investor attention. Even Willie Walsh, Director General of the International Air Transport Association (IATA), shares this sentiment, expecting 2025 to shape up better for airlines than 2024, though still slightly below IATA’s earlier projections.
Breaking Down the Data
According to a report by IATA, as quoted on CNBC, the aviation industry’s net profit is expected to climb to $36 billion in 2025, rising from $32.4 billion in 2024, falling short of the $36.6 billion estimate made in December 2024. Improvement in net profit margin is also anticipated.
Total revenues for the year are expected to reach a record high of $979 billion, just shy of the previous forecast of $1 trillion, marking an increase of 1.3% from 2024. According to IATA, passenger revenues are projected to reach an all-time high of $693 billion this year, increasing 1.6% from 2024, supported by an additional $144 billion in ancillary revenues.
The main driver of the optimistic outlook, jet fuel costs are expected to average $86/barrel in 2025, falling from $99 in 2024, resulting in approximately $25 billion in jet fuel cost savings from 2024. Per IATA, as quoted on CNBC, fuel prices are not expected to be affected by ongoing trade tensions.
Another significant contributor to the improved outlook of the aviation industry is efficiency. Passenger load factors are expected to reach a record high in 2025, with a full-year average of 84%.
Beyond Financials
Robust passenger demand in the Asia-Pacific region, which is also the fastest-growing region, is a tailwind for the aviation industry. Eased visa policies across Asia-Pacific economies, especially China, Vietnam, Malaysia and Thailand, help in the optimistic outlook, boosting both international and regional travel.
The Middle East also lends a helping hand, generating the highest net profit per passenger globally. Meanwhile, Europe is expected to benefit from strong passenger demand, fueled by continued growth in the low-cost carrier segment, according to IATA. Additionally, a strong Euro compared to the greenback also boosts the region’s profitability.
However, delays in aircraft deliveries and a shortage of aircraft and aircraft components remain a common theme across regions.
Possible Headwinds
While the outlook for the aviation market is optimistic, some headwinds remain. So, investors should carefully consider and remain aware of.
The most significant challenge facing the industry is the supply chain. According to IATA, these challenges have had a substantial negative impact on airlines — pushing up leasing costs and increasing the average age of aircraft fleet.
ETFs to Explore
Amid rising concerns over a projected slowdown in global economic growth, the aviation industry may stand out as a bright spot, offering investors a measure of reassurance.
Investors can consider U.S. Global Jets ETF (JETS - Free Report) and Themes Airlines ETF (AIRL - Free Report) to capitalize on the aviation industry’s optimistic outlook.
With a one-month average trading volume of about 2.71 million shares, JETS is the most liquid option, offering investors easier entry and exit while minimizing the risk of significant price fluctuations, which is ideal for active trading strategies.
JETS is also the largest fund out of the two, having gathered an asset base of $857.3 million. Regarding charging annual fees, AIRL is the cheapest option, charging 0.35%, more suitable for long-term investing. AIRL also has a Zacks ETF Rank #1 (Strong Buy).
Performance-wise, compared to SPDR S&P 500 ETF (SPY - Free Report) , both funds have performed well over the past fund, with JETS and AIRL gaining 14.36% and 16.09%, respectively. SPY has added 6.28% over the same period.