Takeoffs and Turbulence: A Babson Professor Examines the State of the Airline Industry

As 2025 turns to 2026, Dennis Mathaisel is taking stock of an industry that has fascinated him his entire life. 

Growing up on Beacon Hill in Boston, Mathaisel was enthralled by technology. Airplanes, in particular, captivated him. “Airplanes captured my attention so much that I often used to spend my weekends at Logan Airport,” says Mathaisel, professor of management science at Babson College. There at Logan, he watched from an observation deck as airplanes came and went. 

That childhood enchantment never left Mathaisel. He went on to work for the McDonnell Douglas Corporation and founded a software firm that developed systems for airline scheduling and resource allocation. He performed research with NASA, the U.S. Air Force, the U.S. Department of Transportation, and a host of airlines. He even became a pilot. 

Given his experience and expertise, Mathaisel is well positioned to consider the state of airlines heading into a new year. What he finds is an industry that’s proving resilient and experiencing growth while facing challenges, including profit margins that remain incredibly tight and lingering worries about air safety. In 2025, media coverage was filled with troubling news of crashes, collisions, and close calls. 

 Some wondered if these incidents were the tragic result of larger issues across the airline system, such as cost-cutting measures or a shortage of air traffic controllers, but Mathaisel isn’t quick to offer sweeping pronouncements. He would rather let investigations play out and comment on the facts once they’re known. “I hesitate to conjecture,” he says. “Let’s stay away from opinions.” 

When dealing with intense media coverage of concerning incidents, he says keeping perspective is important. “Flying remains one of the safest modes of transportation, especially on commercial airlines,” he says. 

Healthy with Headaches 

From an economic standpoint, Mathaisel says the global airline industry is healthy, though not without headaches. “It showed signs of resilience and modest growth in 2025, despite facing a mix of economic, geopolitical, and operational headwinds,” Mathaisel says. 

Revenues were projected to hit $979 billion, up 1.3% from 2024, and nearly 5 billion travelers were expected, an increase of 4% from the previous year. Despite trade tensions, cargo volumes were predicted to see a slight increase of 0.6%. 

As for the aforementioned headwinds, airlines in 2025 faced, among other things, geopolitical disruptions, with air space closures due to conflicts around the world, and supply chain issues, as aircraft delivery delays and engine shortages grounded more than 1,100 planes.  

Despite all that, the long-term view for the industry is more sunny than cloudy. “Airlines are cautiously optimistic,” Mathaisel says, “but remain vulnerable to external shocks and regulatory changes.” 

Tight Profit Margins 

One ongoing challenge many airlines face is slim profit margins. The average profit margin per passenger per flight segment is only around $7 (simply put, a flight segment is generally akin to a leg of a flight).  

Of course, travel isn’t cheap for the consumer, but hop on a typical flight, and by the time you land, you’ll have made the airline on average roughly the cost of a caffe latte and scone from Starbucks. “It may seem surprisingly low given the cost of airfare,” Mathaisel says, “but there are several reasons why airline profit margins are razor thin.” 

Those reasons include consumers who are looking for good deals. “Consumers are highly price-sensitive, forcing airlines to keep fares low,” Mathaisel says. Operation costs are also high. Think jet fuel, salaries for pilots and crew members, and aircraft maintenance. “Aircraft upkeep is expensive, especially with aging fleets and supply chain delays,” Mathaisel says.  

And, remember we are talking about airplanes—huge, complicated machines—as well as all the infrastructure (airports, gates, ground services) that surrounds them. “Aircraft are extremely expensive to purchase and lease,” Mathaisel says. 

Two Profitable Airlines 

Not all airlines face such tight margins. “Delta and Emirates outperform the average airline profit margin through distinct but highly strategic approaches,” Mathaisel says. 

Delta remains the most profitable U.S. airline, thanks to its operational efficiency and high-margin revenue streams. For instance, it has invested in prime airport locations in places such as New York, Los Angeles, and Atlanta, and its SkyMiles loyalty program generates billions in revenue. Delta even owns a refinery, which allows it to hedge against one of the biggest expenses airlines face: fuel. 

For its part, Emirates became the most profitable global airline in 2025. Based in Dubai, United Arab Emirates, the airline serves 148 cities across 80 countries. “Emirates scaled its operations around Dubai’s strategic location and the Airbus A380, maximizing passenger volume and minimizing per-seat costs,” Mathaisel says. 

Safe Way to Travel 

Those profits, though, are no comfort to passengers who may be feeling skittish, with airlines having experienced a number of tragic events in recent months.  

Those events, most notably, included the mid-air collision between a commercial jet and a military helicopter over Washington, D.C., last January and the June crash of an international flight soon after takeoff in Ahmedabad, India. “If you’re feeling uneasy about flying after recent aviation incidents, you’re not alone,” Mathaisel says. 

“Flying remains one of the safest modes of transportation, especially on commercial airlines.”
Dennis Mathaisel, professor of management science

That uneasiness is compounded by what’s known as availability bias, in which incidents that are immediate feel outsized in importance. “We recall recent events more easily, making them seem more common than they are,” Mathaisel says. “When we hear about a crash, our brains overestimate the risk because it’s fresh and vivid.” 

The reality is that air travel remains overwhelmingly safe, Mathaisel says. According to an MIT study, the odds of dying in a commercial air accident are 1 in 13.7 million. By contrast, the National Safety Council calculates the odds of dying in a motor-vehicle crash at 1 in 95.  

“You are over 100,000 times more likely to die in a car accident than in a plane crash,” Mathaisel says. “While it’s natural to feel nervous, the numbers show that the real danger is often on the road, not in the air.” 

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