The aviation sector is poised for a rebound in the second half of the year as travel demand is expected to strengthen, but rising jet fuel costs and geopolitical tensions could threaten that recovery.
Industry analysts note a cautiously optimistic outlook, anticipating that listed airlines and aviation companies will report better results than in the first half, though performance may vary among operators.
Higher oil prices and a weaker local currency remain significant risks, with recent escalations in the Middle East driving jet fuel prices upward and tightening airline margins.
Jet fuel prices increased 17.6% week over week to $149 per barrel, according to recent monitoring.
Fuel retailers raised gasoline, diesel, and kerosene prices by up to P3.65, P10.68, and P11.77 per liter respectively, starting July 21.
The cost surge contributed to weaker first‑quarter earnings for several airlines, as operating expenses climbed. Cebu Air recorded a net loss of P419.94 million versus a P465.90‑million profit a year earlier. PAL posted a P4.28‑billion net income, down 1.15% from the previous year. MacroAsia’s net income fell 58.89% to P129.05 million.
Monitoring by the aviation authority highlighted that the conflict in the Middle East and elevated fuel costs continue to weigh on the industry's outlook, despite expectations of rising travel demand.
The Civil Aeronautics Board recently reduced the passenger fuel surcharge to Level 8 for July 16‑31, following a six‑month series of decreases. During the peak of fuel price increases, the surcharge had reached Level 19 for April 16‑30, with jet fuel averaging $184.63 per barrel.
Data from the Department of Energy showed average daily fuel demand at 78.08 million liters and jet fuel demand at 5.65 million liters as of July 10, with a supply sufficient for 80 days.
Analysts expect the sector to improve in the second half as airlines expand capacity to meet demand. Fleet growth includes orders for nine Airbus A350‑1000s and up to 20 Boeing 787‑10s.
Cebu Pacific plans to receive seven new aircraft in 2026, while AirAsia Philippines intends to deploy Airbus A220s by 2028.
Cab data indicate first‑quarter passenger volume rose 6.7% to 17.05 million, driven largely by domestic traffic.
Key risks remain, with fuel prices a major variable affecting profitability amid ongoing geopolitical tensions that could disrupt global energy markets.
Airlines that enhance operational efficiency while maintaining customer satisfaction are likely to outperform competitors in an increasingly competitive environment.
The sector is shifting from rapid post‑pandemic growth to a focus on disciplined capacity expansion, cost management, and capital allocation, with stronger second‑half results expected but at a moderated pace.
Despite seasonal demand gains, the third quarter is projected to present a combination of lean passenger traffic and heightened expenses, presenting continued challenges for operators.
