Orient Aviation Daily Digest Guest
Sheldon Hee (IATA): “Advocacy is the keyword”
June 26th 2026
“The airlines in Asia-Pacific at large, are in far better condition to face challenges this year than they would have been in previous times,” Sheldon Hee, International Air Transport Association (IATA) Regional Vice President, Asia-Pacific, told Orient Aviation Daily Digest (OADD) in the interview on sidelines of IATA 82nd Annual General Meeting (AGM) & World Air Transport Summit (WATS) in Rio de Janeiro, Brazil, hosted by LATAM Airlines Group. Read More » During the event the IATA published an updated economic outlook, taking into consideration the consequences of the war-related Middle East disruptions and high fuel prices. Globally, airlines’ profitability will be half as low as previously anticipated. Asia-Pacific airlines are projected to achieve $6.6 billion in profit in 2026, compared to $9.8 billion in 2025. Net margins are expected to drop to 2.1% this year, down from 3.5% in 2025. Profit per passenger will reach $3.4, dropping from $5.3 in 2025.
OADD: All things considered, is the new IATA forecast a good outcome for Asia-Pacific carriers?
Sheldon Hee: It is a drop from last year. Last year was strong because we had many tailwinds, and the results were very positive. Clearly, the impact of the Middle East crisis is reflected in the numbers we are forecasting for 2026. 2.1% is not fantastic for a net margin; though it is slightly above the global average. I think it still reflects that, at least overall, the aviation industry is still profitable. And to my point, the industry has actually had several good years and has been able to shore up its finances and expand its balance sheets. So the industry, and even the airlines in Asia-Pacific at large, are in far better condition to face challenges this year than they would have been in previous times.
Are there other advantages airlines in Asia-Pacific enjoy? There is a lot of talk about the cargo boom.
If you look broadly at the Asia-Pacific aviation industry, first, the Asia-Pacific region itself is generally positive in the long term. We talked about potential long-term growth over the years and how it is likely to grow global traffic. Asia-Pacific is also generally home to a significant number of building, infrastructure, and AI-related projects wherever there are data centers. It is home to a significant amount of AI technology. All of that creates an opportunity for additional support to help regional economies grow. That in turn benefits travel, trade, and cargo. We have also seen, especially in the last 12 months, that the trade lanes have shifted. It used to be predominantly Asia-US. It is still important, but we now see much more intra-Asia and Asia-Europe traffic, as well as different types of shipments. All of those opportunities will remain relevant for Asia-Pacific airlines as they navigate this space.
Does it mean they have an advantage over other regions of the world? I think, to some degree, those are the pluses. The challenge is that Asia-Pacific is one of the most fragmented regions in the world, with inconsistent regulatory policies and standards. The biggest enemy of efficiency is inconsistent regulation and standards; essentially, there are different ways of doing things in different markets. That means Asia-Pacific airlines face a structural challenge they will have to overcome. Plus, the point is that many Asia-Pacific currencies are not doing well, while most long-term costs are still in US dollars.
I want to come back to what you said about margins. 2.1% is quite low, but even before the current crisis in the Middle East, it was on the lower side among all the global regions. Why is it the case, and is there a way for Asian-Pacific carriers to improve their margins?
I go back to the point I have just made about the structural challenges. If you look at the Asia-Pacific region, you tend to see airlines that are doing quite well and have higher margins. I think the major Asia-Pacific carriers, including Japanese carriers, Singapore Airlines, and Qantas, may have margins above 2.1%. On the other hand, there are airlines that are hovering at almost flat or very low margins, and others operating even below that.
If you look at the airlines that happen to be on the lower end of the scale, they tend to be in the countries where there is still growth, but usually these are the countries that have weak currencies, which also have challenges in terms of the US dollar-denominated cost, and significant challenges in terms of regulatory burdens, taxation, structural challenges, etc.
I think that summarizes the challenge in Asia-Pacific as a whole. You have some very strong, developing economies, which have great infrastructure, a great regulatory environment, and good leadership; you have very strong airlines operating from and to these territories. Then you have other very promising countries where the regulatory environment has not kept pace. Where the best practices that you see in the other parts of the world are not there. I think this is most prevalent in areas of taxation, which really impacts operating costs.
What you said points to the importance of advocacy, the activity you are involved in. As I can see from your LinkedIn profile, you travel extensively in the region, meeting with airlines. As you hear the voice of industry very closely, can I ask you: what issues do the airline representatives raise during the meetings?
Advocacy is the keyword. My main role is to engage with government leaders and try to trigger conversations around policy issues that either the leaders themselves are not aware of, or that they are aware of but struggle to make broader change in the government because their counterparts in different ministries or broader stakeholders’ environment are not aware. I think the approach we take is quite different. We do not discuss these conversations publicly because they take place behind closed doors.
In countries like India, Indonesia, and Vietnam, the level of taxation burden on airlines operating within the country is quite serious. Typically, there are fuel taxes, limited availability of jet fuel, and competition, which also means jet fuel prices peak. You often see sales taxes, some form of GST, or VAT on the ticket itself, which just bumps up the cost of travel for everyone. At the same time, you tend to see price controls, which make it difficult for airlines to raise prices when they want to, and where there is demand.
If you combine everything, these countries really do need a voice to explain to governments what aviation brings to the people. Fundamentally, we believe that aviation is an enabler. It stimulates growth and creates opportunities across the entire value chain. So it is very important to persuade the governments about this impact, and the loss of this potential upside, if governments just think about taxing aviation as a luxury good, which is often the case.
Do governments tend to listen?
I think it depends. In Asia, our ability to explain, educate, and be the trusted source has been built over the years.
As IATA, we invest significant time in being available to our stakeholders. When there are topics they want to understand better, we offer our assistance just to help them technically. I think this is important because, at the end of the day, we can only share our perspectives or the policy. If they see that we are able to inform them, share best practices, or explain how we can achieve better output. That is also part of the conversations when I meet with them. We engage more actively and effectively in specific projects to support initiatives to modernize certain aspects of aviation in each country.
Can I ask you about the current situation related to the conflict in the Middle East? It is said that the Asia-Pacific region is among the most affected by this war. When you meet the airline leaders, what is the sentiment?
Yes, Asia-Pacific is probably the region that feels the largest impact. They feel the impact mainly in terms of costs. The cost of jet fuel. I suspect that many Asia-Pacific airlines also have fewer shields in other area, say currency risk or fuel hedges. But that’s it. The rest of the industry doesn’t really change. So yes, they probably have a greater burden in the short term, but there isn’t really any unique or distinct challenge for Asia-Pacific airlines beyond what airlines faced before. We have shown during COVID that we are a resilient industry, and we found ways to survive and to continue to thrive.
One thing we are advocating for with governments on behalf of our airlines is slot flexibility. Recently, we published guidelines on justified non-utilization of slots. Quite a number of countries in the region have agreed to accept applications for non-utilization of slots, specific to current challenges. It gives airlines more flexibility. One of the biggest tools airlines have for managing costs is reviewing their network. The challenge without the non-utilization of slots is that, if the 80-20 rule continues, airlines might be forced to keep their long-term assets by flying empty planes and operating at significant financial loss.
Some countries have done more. India just announced measures that essentially waive some of the regulatory structures I described, including the removal of certain local taxes. Vietnam has done the same. These actions are very helpful for their respective countries. We do hope that this is not just temporary, but this also will be an opportunity for the decision makers to take a look at those policies, and decide whether they make sense in the longer term, rather than lift them up and put them back.
