Inflation and tariff pressures may accelerate the easing of Asia Pacific demand growth

Asia Pacific international passenger traffic continued its robust growth trend in the first half of 2025, although the region's major industry group warns that the rate of increase will cool off.

While geopolitical disputes and macroeconomic factors are affecting some international traffic flows, the Asia Pacific region has been strong overall, said Association of Asia Pacific Airlines (AAPA) Director General Subhas Menon in a recent interview.

There has already been some expected moderation in the massive post-pandemic demand surge, but the effects of trade disputes and inflation will likely amplify the slowdown.

Meanwhile, cargo is likely to be more affected than passenger demand by tariffs.

All of these factors reinforce the impression that the latest airline profit cycle appears to have passed its peak.