Regional differences in airline profitability: the impact of macroeconomic conditions, demand, and capacity dynamics

Boško Rupić; Aleksa Panić; Stefan Milojević

doi:10.71159/bizinfo260023R

Authors

Boško Rupić Singidunum University, Belgrade, Serbia
Aleksa Panić Singidunum University, Faculty of Tourism and Hospitality Management, Belgrade, Serbia
Stefan Milojević Educons University, Faculty of Business Economics, Sremska Kamenica, Serbia

DOI:

https://doi.org/10.71159/bizinfo260023R

Keywords:

airline industry, profitability, capacity management, profit per passenger, macroeconomic growth

Abstract

This paper examines regional differences in airline profitability through an integrated framework linking macroeconomic conditions, passenger demand growth, capacity development, and operational constraints. The study covers six IATA regions over the 2024–2026 period, combining 2024 observed data with 2025 estimates and 2026 forecasts derived from IATA financial outlooks and IMF economic growth projections. The analysis is based on a comparative approach and incorporates indicators of net profit margin, passenger traffic growth, capacity growth, and profit per passenger as a unit-level measure of demand monetization efficiency. The analysis is descriptive and comparative rather than econometric, while the cross-regional correlations are used as exploratory measures of association across the six IATA regions rather than for statistical inference. The findings indicate that demand growth alone is not sufficient to generate higher profitability, as market structure, capacity management, pricing discipline, and operational efficiency play a decisive role in financial outcomes. The results further show that macroeconomic growth has a stronger relationship with traffic expansion than with airline profitability, while profit per passenger provides additional explanatory value in understanding regional performance differences.

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