IATA: Airline payment costs hit $24.5bn, outpacing sales growth

Airlines worldwide spent $24.5 billion to process $1.05 trillion in sales in 2025, the International Air Transport Association (IATA) said in a report on Tuesday. Payment costs rose 10.4% from 2023, faster than the 7.7% growth in airline sales over the same period, when sales were $977 billion.

The figure highlights pressure on an industry with high operating costs and thin margins. IATA said the average cost of processing payments was $5 per passenger. That is above its forecast net profit of $4.50 per passenger for airlines in 2026.

Card fees lead the burden

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

Card payments carried 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%. IATA said the gap shows savings airlines could make by expanding payment methods and using more efficient systems.

Failed payments also cost revenue. IATA research found that about one in five attempts to buy ancillary services was not completed because the first payment was declined and no alternative method was offered.

IATA pushes cheaper options

Sandrine Le Borgne, IATA’s Interim Director General and Chief Financial Officer, said: “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.” She also said payment transaction costs were rising faster than industry revenues, a trend she called unsustainable despite technology advances.

IATA is pushing lower-cost payment methods as passenger preferences shift from cards. Its 2025 Global Passenger Survey found that 29% of passengers preferred digital wallets, while 8% favoured local instant payment solutions. IATA Pay lets passengers buy travel through local instant payment systems. It has been rolled out in 34 countries covering 38 payment schemes.

Its IATA Financial Gateway lets airlines and travel suppliers manage payments across multiple sales channels in more than 170 countries using over 300 payment methods. IATA is also promoting transparency on agency card costs through Transparency in Payments, which allows airlines to set payment policies within the IATA Billing and Settlement Plan. The aim is to help airlines decide whether to accept agency cards or use lower-cost options, including IATA EASY PAY.

IATA said it is working with airlines and corporate customers on a new approach to corporate travel payments as the industry moves to its Offers and Orders model. It has also developed an Airline Payment Framework Management Foundation to help airlines align commercial, financial and operational priorities when choosing payment options. Le Borgne said more payment choices could cut processing costs and recover revenue lost through declined transactions.

Nigerian airlines face similar pressure

Nigeria’s domestic aviation industry faces its own profitability pressure from high operating costs, aviation fuel prices and multiple taxes and charges. In September, Air Peace CEO Allen Onyema said no Nigerian airline made $1 million in profit in 2025. He said airlines face about 54 taxes, fees and charges across aviation agencies and the Nigeria Revenue Service. Some costs add about N25,000 to domestic tickets and $150 to $180 to international fares.

Onyema warned that rising costs raise ticket prices, weaken passenger demand and limit airlines’ ability to generate profits and reinvest. He called for harmonisation of aviation charges and replacement of percentage-based ticket sales levies with fixed charges.