IATA calls for European tax cuts as fuel costs bite
IATA called for urgent European airport tax cuts at its Rio AGM on Saturday, as fuel costs at $163 per barrel erode the margins that its December $41bn profit forecast assumed at $88 per barrel.
The International Air Transport Association (IATA) has called for an urgent reduction in European airport taxes and charges at its 82nd Annual General Meeting in Rio de Janeiro on Saturday, arguing that the combined pressure of high fuel costs and a rising regulatory burden is compressing airline margins to unsustainable levels at precisely the moment the industry is most exposed to external cost shocks.
IATA director general Willie Walsh, speaking on the opening day of the Rio AGM hosted by LATAM Airlines Group, told delegates the case for reducing the tax and charge burden on European aviation has become more urgent since the Iran-driven fuel price spike of late February.
The Rio call updates IATA's March 2026 position, when it formally urged the EU to review the Emissions Trading System to prioritise competitiveness alongside decarbonisation, warning that revenues must be channelled back into the industry's transition. The current Rio statement sharpens that position in the context of fuel costs that have roughly doubled since 27 February.
The backdrop to Walsh's call is the gap between IATA's December 2025 profit forecast and the reality of 2026: IATA projected global airline net profit of $41bn at a 3.9 per cent net margin, based on jet fuel at $88 per barrel. Current jet fuel spot prices are approximately $163 per barrel, meaning the Iran conflict has materially eroded the headroom IATA's December numbers implied.
Walsh's December framing was already cautious, describing the $41bn profit forecast as "welcome news considering the headwinds the industry faces" while acknowledging that industry-level margins remained "a pittance considering the value that airlines create." The margin of 3.9 per cent is below the estimated cost of capital of 8.2 per cent; at current fuel prices, the gap widens further. At current fuel prices, the gap between the cost of capital and the actual return widens further.
Europe is the region where the tax and charge argument is most acute: IATA's December forecast had European carriers contributing $14bn to global profit, more than North America's $11.3bn. That advantage has been narrowed by the fuel shock, which is proportionally more damaging to carriers with thinner margins and lower hedge coverage.
The Rio AGM runs through 8 June, with Roberto Alvo of LATAM taking over as IATA Board of Directors Chair for 2026 to 2027 at the meeting. A CEO panel hosted by CNN's Richard Quest features Oman Air CEO Con Korfiatis, Pegasus CEO Guliz Ozturk and Abra CEO Adrian Neuhauser among the speakers.
