Global airlines are facing a mounting financial crisis as the cost of processing payments continues to outpace industry revenue growth, according to newly released data from the International Air Transport Association (IATA). In 2025, the industry incurred a staggering $24.5 billion in payment-related costs to process $1.05 trillion in total sales.
This figure represents a 10.4% year-on-year increase in total payment costs, a rate that significantly exceeds the 7.7% growth in overall travel sales recorded since 2023. Perhaps most alarming is the disparity between payment friction and airline profitability: the average cost per transaction stands at $5 per passenger, while IATA forecasts a net profit of only $4.50 per passenger for 2026. This data underscores a “capital intensive” and “hyper-competitive” environment where margins are being squeezed by the very systems used to process ticket sales.
“The fact that payment transaction costs are increasing faster than industry revenues is unsustainable,” said Sandrine Le Borgne, IATA’s Interim Director General and CFO. “Despite significant technological advances, [this] highlights the critical need for greater cost efficiency.”
The financial burden of $24.5 billion is broken down into three core segments. Direct payment fees account for the lion’s share at $20.7 billion, while $2.9 billion is attributed to internal operating costs, including system maintenance, staffing, and compliance. Additionally, $0.9 billion was lost entirely to fraud or uncollected sales. Credit cards remain the most expensive payment method, with an average fee of 2.53%, while alternative payment solutions are available for as little as 0.01%.
To mitigate these losses, IATA is aggressively promoting a shift toward lower-cost payment alternatives. Passenger behavior is already shifting, with the 2025 IATA Global Passenger Survey revealing that 29% of travelers prefer using digital wallets, and 8% favor local instant payment solutions. IATA is supporting this transition through its “IATA Pay” initiative, which is currently live in 34 countries, and the “IATA Financial Gateway,” a platform that optimizes payment management across 170 countries.
Beyond simple cost-cutting, IATA suggests that better payment integration is a growth strategy. Le Borgne noted that roughly one in five ancillary purchase attempts—such as seat upgrades or baggage fees—fail because of payment friction. By offering more diverse and reliable payment methods, airlines could recapture significant amounts of lost revenue.
Moving forward, IATA plans to improve transparency regarding agency cards and is developing a new, modernized approach to corporate travel payments. Coupled with the new “Airline Payment Framework,” these efforts aim to ensure that payment strategies better support both the customer experience and the industry’s narrow profit margins. As the industry looks toward 2026, the mandate is clear: airlines must modernize their financial infrastructure to stop the steady erosion of their bottom line.
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