08 Aug 2025
Aviation Market Snapshot - Q2 2025
Our Q2 2025 report explores the tariff changes and geopolitical tensions reshaping cargo flows, fuel dynamics and investor strategies.
Key market insights
- Global passenger traffic: RPK reached 806 billion in May, with seasonally adjusted figures stabilising at 786 billion, indicating a consistent demand despite the slower growth rate.
- International vs. domestic traffic: International RPK grew by 6.7% YoY, while domestic RPK expanded at a slower rate of 2.1% YoY. The US domestic market experienced a contraction of 1.7%, impacting overall industry performance.
- Flight schedule expansion: The number of scheduled passenger flights worldwide is projected to grow by 2.6% YoY in June and 2.5% YoY in July, reflecting ongoing demand for air travel.
Regional performance
- Asia Pacific: Airlines in this region led the growth with a 9.4% increase in RPK, contributing approximately 60% to the global net increase. The PLF rose to 84.0%, the highest among all regions.
- Europe: European airlines saw a 3.4% increase in RPK, accounting for 20% of the global growth. The PLF for European carriers also reached 84.0%.
- North America: In contrast, North American airlines recorded a 0.5% decline in RPK, marking a return to negative growth after two months of increases.
Domestic market insights
- The US domestic market's contraction is attributed to economic uncertainty and reduced government travel, leading to a 3.1 percentage point drop in PLF to 83.7%.
- Conversely, Brazil's domestic market experienced a remarkable 18.3% growth in May, supported by a 15.7% increase in capacity, marking the strongest performance among major domestic markets.
The rise of protectionism in economic policy has put the air cargo market in the spotlight. The expectation is that US tariffs and the removal of a de minimis exemption for Chinese imports will weigh on air cargo growth. Year-on year CTK growth in May 2025 as reported by IATA has moderated since March and April, perhaps reflecting the front-loading of imports in anticipation of tariffs earlier in 2025.
Airline financial performance
In May 2025, the air cargo industry experienced a year-on-year increase in demand, as measured in Cargo Tonne-Kilometres (CTK), of 2.2%. This growth represents a slowdown from the 5.8% increase observed in April, largely attributed to the unwinding of front-loading effects ahead of new tariffs.
Key highlights
- International demand: International CTK rose by 3.0% YoY, with the Asia Pacific region leading the charge at an impressive 8.2% growth. However, North America faced challenges due to recent tariff changes, resulting in a notable decline in traffic.
- Capacity recovery: Global available cargo space, measured in Available Cargo Tonne-kilometres (ACTK), grew by 2.0% YoY, leading to a slight increase in capacity utilization, with the Cargo Load Factor (CLF) rising by 0.1 percentage points compared to May 2024.
- Cost trends: Jet fuel prices dropped significantly, falling 18.8% YoY and 4.3% month-on-month, contributing to a decrease in cargo freight rates by 2.9% YoY and 3.7% MoM for the first time in 2025.
Market dynamics
- Global trade impact: The recent tariff increases and the removal of the de minimis exemption have disrupted established air cargo flows, causing carriers to adjust capacity on certain routes. This uncertainty may continue to impact planning and optimisation within the supply chainn.
- Regional performance:
- Asia Pacific: Strongest growth at 8.3% YoY, although down from the previous month.
- Europe: Modest growth of 1.6% YoY, reflecting a decline from April.
- North America: The most significant decline at 5.8% YoY, driven by tariff effects
- International cargo trends: International cargo accounted for 87.3% of the total cargo market in 2024. The Asia Pacific region's carriers continued to lead international air cargo growth, supported by tech sector exports, while North American airlines reported the largest contraction in international routes.