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Aviation Sector Outlook: Analysts See Profit Recovery by 2027 as Fuel Costs Ease

Transportation · Airlines · economic_daily · 2026-10-24

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While rising fuel costs weigh on short-term airline profits, analysts expect a recovery by 2027 as oil prices decline, favoring China Airlines over EVA Air.

What Happened

Profitability Outlook: The airline industry is expected to face a period of adjustment in 2026 as rising fuel costs compress margins in the short term. However, analysts anticipate a significant profit recovery by 2027, driven by a projected decline in aviation fuel prices that will alleviate operational cost pressures.

Operational Performance: Domestic carriers saw strong growth in both passenger and cargo yields during the first three quarters of the year. Increased outbound travel demand and higher ticket prices, combined with robust shipments of semiconductors and electronics, helped drive double-digit growth in cargo yields for both China Airlines and EVA Air.

Fuel Price Headwinds: Short-term profitability remains under pressure due to surging aviation fuel prices, with the fourth-quarter average expected to rise 61% year-over-year. Analysts project that fuel prices will remain elevated throughout 2026, posing a persistent challenge to airline bottom lines in the near term.

Investment Strategy: Looking ahead to 2027, analysts forecast a drop in fuel prices to $110 per barrel, which would significantly lower operating costs. With airline dividend yields hovering around 4%, Tigerair Taiwan stands out as a relatively attractive option with a yield of approximately 4.5%.

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