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 figures are contained in a report released by the International Air Transport Association (IATA) on Tuesday.

Payment costs rose faster than airline sales between 2023 and 2025, adding pressure to an industry characterised by high operating expenses and narrow profit margins.

Airlines spend $24.5 billion on payments

According to IATA, the rising cost of payment processing is putting additional pressure on airlines, an industry characterised by intense competition, high capital requirements and narrow profit margins.

The association said payment costs increased by 10.4% compared with 2023, outpacing the 7.7% growth in airline sales over the same period.

• “Airlines globally incurred $24.5 billion in payment costs to process $1.05 trillion in sales in 2025, a 10.4% increase in total costs versus 2023. That far exceeds the overall growth in travel sales over the same period, which was up 7.7% from $977 billion in 2023,” the report read in part.
• The association said the average cost of processing payments was $5 per passenger, compared with its forecast net profit of $4.50 per passenger for airlines in 2026.
• “The airline industry is hyper competitive, capital intensive and famously low margin. In such an environment every cost item needs to be looked at carefully,” said Sandrine Le Borgne, IATA’s Interim Director General and Chief Financial Officer.

She said payment transaction costs were increasing faster than industry revenues, a trend she described as unsustainable despite advances in technology.

Card fees drive airline payment costs

IATA’s analysis showed that most airline payment costs went towards transaction fees, with additional expenses linked to payment operations and losses from fraud or uncollected sales.

• $20.7 billion, representing 84.5% of total payment costs, went towards fees directly associated with completing transactions.
• Another $2.9 billion, or 11.8%, covered operating expenses linked to payment systems, delayed cash flow, staffing and compliance.
• The remaining $900 million, representing 3.7% of the total, was lost to fraud or uncollected sales.

Card payments accounted for the highest transaction fees, averaging 2.53%, compared with the estimated overall average of 1.97%. Some of the lowest-cost payment options had fees of just 0.01%.

The association said the differences highlight the potential savings airlines could achieve by expanding the payment methods available to passengers and adopting more cost-efficient systems.

Failed payments also affect airlines’ ability to generate revenue from additional services. Its research found that about one in five attempts to purchase ancillary services was not completed because the initial payment was declined and no alternative method was offered.

IATA pushes cheaper airline payment options

IATA is encouraging airlines to introduce lower-cost payment methods, including digital wallets and local instant payment solutions, as passenger preferences shift away from traditional card payments. Its 2025 Global Passenger Survey found that 29% of passengers preferred digital wallets, while 8% favoured local instant payment solutions.

• To support this transition, the association said its IATA Pay service enables passengers to purchase travel using local instant payment systems. The service has been rolled out in 34 countries, covering 38 payment schemes.
• Its IATA Financial Gateway platform also allows airlines and travel suppliers to manage and optimise payments across multiple sales channels in more than 170 countries, using over 300 payment methods.
• The association is promoting greater transparency around agency card costs through its Transparency in Payments solution, which allows airlines to establish payment policies within the IATA Billing and Settlement Plan. This is intended to help airlines assess whether to accept agency cards or choose lower-cost alternatives, including IATA EASY PAY.

In addition, IATA is working with airlines and corporate customers on a new approach to corporate travel payments as the industry transitions to its Offers and Orders model. The initiative aims to improve payment efficiency, simplify reconciliation and provide better transaction data.

The association has also developed an Airline Payment Framework – Management Foundation to help airlines align their commercial, financial and operational priorities when selecting payment options.

Le Borgne said offering passengers more payment choices could help airlines reduce processing costs while recovering revenue lost through declined transactions.

Nigerian airlines struggle with high costs

Nigeria’s domestic aviation industry faces similar profitability pressures, with high operating costs, aviation fuel prices and multiple taxes and charges weighing on airline finances.

• In September, Air Peace CEO Allen Onyema said no Nigerian airline made $1 million in profit in 2025, citing the burden of operating costs and multiple industry levies.
• Onyema said airlines face about 54 taxes, fees and charges across aviation agencies and the Nigeria Revenue Service, with some costs adding about N25,000 to domestic tickets and $150 to $180 to international fares.
• He warned that rising costs translate into higher ticket prices, potentially weakening passenger demand and limiting airlines’ ability to generate profits and reinvest in their operations.

He called for the harmonisation of aviation charges and the replacement of percentage-based ticket sales levies with fixed charges.