Global Aviation Outlook 2026

The global aviation industry enters 2026 with renewed momentum, having moved beyond the turbulence of the Covid era. Growth is firmly on the agenda. The outlook for aviation finance is positive but not without challenges. Success will depend on agility, strategic foresight, and operational resilience. These are some of the key conclusions from PwC Ireland’s 2026 Global Aviation Outlook, published today.

Airline profitability is steady, and passenger numbers continue to grow, supporting continued demand for aircraft of all ages and sizes. According to the most recent IATA reports, the global airline industry is expected to generate record profits of US$41 billion in 2026, up from US$39.5 billion last year, representing a profit margin of 3.9% or around US$7.90 per passenger. On the passenger traffic side, IATA is forecasting airline traffic growth of 4.9% for 2026, albeit down marginally from 5.2% in 2025.

At the same time, geopolitical instability and protectionism are contributing to the stubbornly low airline profit margins and remain significant challenges.

IATA expects average global fares to remain flat in 2026 compared to 2025, driven by a similar rise in capacity and passenger demand.

Aircraft supply improving but supply chain still facing major constraints

2026 is expected to be a year of opportunity and transition. Aircraft supply is improving, but engine and maintenance, repair and overhaul (MRO) constraints remain a critical bottleneck. The supply chain, while improving, still faces major constraints, particularly with engines and MROs, and these will test the industry’s ability to sustain growth and transition to newer, more efficient aircraft.

Brian Leonard, Aviation Finance Leader, PwC Ireland, said: “The outlook for the global aviation market is positive but not without challenges. On a strategic level, more growth opportunities, including mergers and acquisitions (M&A) in 2026 will continue to transform the aircraft leasing industry landscape. The rapid pace of technology change, including GenAI, offers lessors an opportunity to transform their operating models and position themselves for this future growth.”

Leasing – consolidation the big theme

PwC expects leasing companies to face continued consolidation (including M&As) and increased lease returns, testing assumptions about asset risk and value.

New delivery funding requirements are expected to be in excess of US$100 billion in 2026, of which lessors are expected to provide approximately 60%. The level of competition among leasing companies and lenders means that there is a low risk of any funding gaps. The growth of private credit has led to increased confidence among lenders about their underwriting capabilities. The availability of financing has been one of the most resilient components of the leasing market.

PwC expects the leasing world to look different by the end of 2026 compared to now. A more regular delivery and aircraft trading cycle should help lessors grow their portfolios. Coupled with the expected continued consolidation, we should see larger asset managers who will need to look at their operating models in more detail to ensure they are fit for purpose.

Technology adoption is critical and offers lessors a chance to enhance efficiency and data integrity. New technologies, including GenAI, offer lessors the chance to begin transitioning to systems that employ better dashboards, automation, and data integrity.

Sustainability pressures persist, requiring proactive strategies to manage climate risk and regulatory compliance. While regulatory pressures have shifted, the imperative for lessors and airlines to address climate risk, secure low-carbon energy and adapt supply chains is undiminished.

On tax, focus should shift to refining tax governance and ensuring resilience in M&A transactions - platforms built for yesterday’s tax environment can’t necessarily stand up to today’s requirements.

Ireland – world leader

Paul Sheridan, Aviation Finance Advisory Services Leader, PwC Ireland, commented on the Irish aviation industry: “The continued growth in air traffic and airline fleets creates the opportunity for similar expansion in Ireland. Leasing companies, in particular, can benefit from increased deliveries to grow the size of their fleets. Ireland continues to be a world leader in aviation finance with over half of global leased aircraft managed from Ireland. With a resilient industry in Ireland, we expect this position to grow.”

ENDS