Middle East carriers face decline in demand in March

Middle East airlines encountered a rare decline in passenger demand in March 2025 as international demand fell by 1.0 per cent year-on-year, according to the International Air Transport Association (Iata).

The regional passenger demand decline contrasted with global trends where total passenger demand, measured in revenue passenger kilometers (RPK), rose by 3.3 per cent compared to March 2024.

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This downturn, largely attributed to the timing of the holy month of Ramadan, underscores the challenges the region’s airlines face in a competitive global market, even as they leverage their strategic hub status and operational resilience.

Iata’s data reveals that Middle Eastern carriers saw capacity, measured in available seat kilometres (ASK), increase by 2.8 per cent year-on-year. However, the load factor  —  a key indicator of seat occupancy  —  dropped significantly to 74.6 per cent, down 2.9 percentage points from March 2024. This decline reflects the impact of Ramadan, which shifts travel patterns as many residents prioritize religious observances over leisure or business trips.  For UAE airlines, which operate out of global hubs like Dubai and Abu Dhabi, this seasonal fluctuation poses a temporary setback in an otherwise robust growth trajectory.

Globally, international demand grew by 4.9 per cent, with Asia-Pacific airlines leading at 9.9 per cent growth. In contrast, the Middle East’s performance lagged, highlighting the region’s sensitivity to cultural and economic factors. Willie Walsh, Iata’s director general, noted that while global air travel demand strengthened slightly from February’s 2.7 per cent growth, capacity expansion outpaced demand, leading to lower load factors.

“Passenger demand grew by 3.3 per cent year-on-year in March, a slight strengthening from the 2.7 per cent growth reported for February. A capacity expansion of 5.3 per cent, however, outpaced the demand expansion leading to a load factor decline from record highs to 80.7 per cent systemwide. There remains a lot of speculation around the potential impacts of tariffs and other economic headwinds on travel. While the small decline in demand in North America needs to be watched carefully, March numbers continued to show a global pattern of growth for air travel. That means the challenges associated with accommodating more people who need to travel—specifically alleviating supply chain problems and ensuring sufficient airport and air traffic management capacity — remain urgent,” Walsh said, a point particularly relevant for the UAE’s ambitious aviation sector. The UAE’s airlines, central to the Middle East’s 9.4 per cent share of global RPKs, are navigating these challenges with strategic adjustments. Emirates and Etihad have invested heavily in fleet modernisation and network expansion, positioning Dubai and Abu Dhabi as critical connectors between East and West.

However, the March demand dip underscores the need for agility. Ramadan’s timing likely reduced leisure travel, while business travel may have been affected by global economic headwinds, including speculation around US tariffs and slower demand in markets like North America, which saw a 0.1 per cent decline.

Despite the regional decline, UAE carriers benefit from the country’s diversified economy and tourism appeal. Dubai’s status as a global tourism and trade hub continues to drive long-term demand, with initiatives like Expo 2020’s legacy and new attractions bolstering passenger numbers. Etihad’s focus on premium services and partnerships, alongside Emirates’ extensive route network, ensures resilience. The UAE’s investment in sustainable aviation fuels and digital innovations, such as contactless check-ins, further enhances its competitiveness.

Iata’s broader data shows a mixed global picture. Domestic demand grew marginally by 0.9 per cent, weighed down by declines in markets like the US (down 1.7 per cent) and Australia (down 1.2 per cent). Meanwhile, India and Brazil posted strong growth at 11.0 per cent and 8.9 per cent, respectively. The global load factor fell to 80.7 per cent, a 1.6 percentage point drop, reflecting capacity growth outstripping demand — a trend mirrored in the Middle East.

Aviation analysts said GCC airlines are well-positioned to rebound post-Ramadan, with peak travel seasons like Eid and summer holidays expected to boost demand. However, external risks, including potential trade tariffs and supply chain constraints, require careful monitoring. The UAE’s aviation sector, backed by government support and infrastructure investments, remains a cornerstone of its economy. “By balancing capacity with demand and leveraging their global connectivity, Emirates, Etihad, and other regional carriers can navigate these challenges, ensuring the Middle East remains a vital player in global aviation,” they said. 

Written by

Issac John Staff Writer

Issac John is Managing Editor at Khaleej Times and has over 45 years of experience in top-tier newspapers across UAE. A seasoned business writer and economic analyst, he brings unmatched insight into the geopolitics and geoeconomics shaping the Gulf and India.