Soaring Profits, Soaring Prices: Are Travellers Paying a New Price for British Airways’ Record-Breaking Success?

Published on March 1, 2025

Frequent travelers had been closely following the financial success of International Airlines Group (IAG), the parent company of British Airways, Iberia, Vueling, and Aer Lingus, after the airline giant had reported a sharp rise in profits fueled by record travel demand.

Passengers who had flown with IAG’s airlines over the past year had expressed little surprise at the company’s financial performance, as airfare prices remained high and planes continued to be packed on nearly every route. Many had felt that demand for both leisure and business travel had surged, despite economic concerns, and had wondered whether ticket prices would ever return to pre-pandemic levels.

A Record-Setting Year for IAG Amid Travel Boom

As IAG had announced its full-year results for 2024, travelers had taken note of the company’s staggering 27% increase in adjusted operating profit, which had risen to €4.4 billion ($4.6 billion), well above the €3.7 billion forecast by analysts.

The company had also reported a 9% increase in total revenue, reaching €32.1 billion ($34 billion), further underscoring the strength of the travel industry’s recovery.

With IAG’s London-listed stock rising by 5% following the announcement, investors had responded positively to the airline group’s performance, with shares now up 17% since the beginning of the year and over 130% higher than 12 months ago.

For travelers, these numbers had been a reflection of what they had already been experiencing—higher fares, crowded flights, and airlines prioritizing profitability over cost-cutting.

Leisure Travel Outpaces Business Travel Recovery

One of the key trends that passengers had observed was the continued dominance of leisure travel in driving airline profits.

IAG had confirmed that leisure travel remained a major priority for households, with many passengers choosing to spend money on experiences rather than material purchases. This shift had been fueled by pent-up demand post-pandemic, with travelers eager to explore new destinations despite inflation and economic concerns.

However, while corporate travel had increased, IAG had acknowledged that it was unlikely to return to pre-pandemic levels for short-haul trips. Many business travelers had expressed a preference for virtual meetings or hybrid work arrangements, reducing the need for frequent short-haul flights within Europe and other regions.

Long-haul corporate travel, however, had continued to show resilience, with British Airways remaining the market leader for transatlantic flights from London. Passengers who regularly flew between the UK and North America had noted that BA’s premium cabin offerings remained in high demand, leading IAG to announce that by the end of 2025, British Airways would be the only airline offering first-class service across the Atlantic from London.

What IAG’s Success Means for Airline Pricing and Travelers

With IAG’s profits soaring, many travelers had speculated about whether ticket prices would decrease in the near future. Some had hoped that increased profitability might lead to fare reductions, but industry analysts had suggested that strong demand was likely to keep prices elevated for the foreseeable future.

Frequent flyers had pointed out several reasons why airfares might remain high despite the airline group’s financial success:

• Aircraft availability remains limited, with many airlines still awaiting deliveries of new planes due to supply chain disruptions.
• Rising operational costs, including fuel and labor, continue to impact airline pricing strategies.
• Strong demand allows airlines to maintain higher fares without losing passengers.

Some travelers had also raised concerns about seat availability, as airlines had continued to optimize cabin layouts to maximize revenue per flight. Business and leisure travelers alike had noticed that premium cabin upgrades were becoming more expensive, while economy seats had been filling up faster than in previous years.

IAG’s €1 Billion Share Buyback and Debt Reduction

As IAG had announced a €1 billion share buyback program, some passengers had questioned whether the airline group would reinvest more of its profits into improving services and lowering fares.

Richard Hunter, head of markets at Interactive Investor, had commented that the buyback reflected confidence from an airline group that was currently “flying high”.

However, travelers had noted that IAG was still managing significant debt from the pandemic years, when airlines had borrowed heavily to survive global travel restrictions. CEO Luis Gallego had stated that the company’s financial strategy remained focused on improving margins and ensuring long-term stability, rather than rushing to reduce fares.

How IAG Compares to Other Global Airlines

For travelers who frequently flew with different international carriers, IAG’s financial results had sparked curiosity about how it compared to competitors in the U.S. market.

Compared to IAG’s 130% stock increase over the past year, other major airlines had shown mixed performance:

• United Airlines stock had risen 105%, benefiting from strong demand.
• Delta Air Lines had seen a 42% increase, reflecting a steady recovery.
• American Airlines stock had dropped by 6%, indicating challenges in sustaining profitability.
• Southwest Airlines had declined by 10%, as the carrier struggled with operational efficiency.

Passengers who had traveled frequently between Europe and the U.S. had noted that IAG’s strong financial position had helped it maintain transatlantic leadership, especially through British Airways’ premium travel offerings.

Global Impact: What This Means for the Future of Travel

The surge in IAG’s profits had raised questions about the overall trajectory of the global airline industry. Many travelers had wondered whether other airlines would continue raising fares, increasing capacity, or investing in new routes to match growing demand.

Industry observers had suggested that the ongoing travel boom was likely to continue through 2025, with international leisure trips and premium business travel fueling airline revenues. However, some had warned that economic uncertainty, inflation, and geopolitical tensions could impact future travel trends.

For global travelers, IAG’s financial success had confirmed that air travel demand remained stronger than ever, but it had also served as a reminder that pricing pressure and competitive booking strategies would be key factors for those planning trips in the months ahead.

A Strong Airline Market, But at What Cost?

As IAG celebrated record profits, travelers had found themselves at a crossroads—excited about the industry’s resurgence but also wary of the continued high costs of flying.

While the demand for travel remained high, many had hoped that competition among airlines would eventually drive down prices. Others had acknowledged that for the foreseeable future, airfares were unlikely to drop significantly, particularly on long-haul and premium routes.

For now, those planning to travel in 2025 and beyond had recognized that flexibility, early booking, and smart fare monitoring would be essential for navigating an industry that was soaring in more ways than one.