IATA AGM 2026: Why China’s aviation story will be one of the most important in the world | News

For years, the center of gravity of the aviation industry has been slowly shifting to the east.

At this year’s IATA Annual General Meeting in Rio de Janeiro, that shift felt less like a prediction and more like a reality.

While much of the discussion in Europe has focused on regulation, taxes and competitiveness, the conversation around North Asia has focused on growth, digital transformation and the rise of China as a force increasingly shaping the future direction of global aviation. According to IATA’s Regional Vice President for North Asia, Xie Xingquan, the region’s story is no longer just about recovery. It’s about scale, influence and transformation.

The numbers alone explain why.

China now accounts for about 30% of global domestic air traffic, operates 249 scheduled airports, has expanded its route network by 64% over the past decade, and generated about $115 billion in airline revenues by 2025.

Yet the most important development may not be the size of the Chinese aviation market.

It may be how quickly the country redefines what an aviation market can become.

The giant still has room to grow

Most mature aviation markets dream of finding new passengers.

China still has hundreds of millions waiting for their first flight.

IATA estimates that approximately 900 million people in China have never traveled by air. Even after decades of growth, aviation penetration remains well below its long-term potential.

That helps explain why industry leaders continue to view China as one of the most compelling longer-term growth stories in aviation.

Domestic traffic continues to grow steadily, with a growth rate of 4.7% in 2025, strengthening China’s position as the second largest domestic aviation market in the world. Chinese domestic traffic now represents about 83% of the size of the US market, a remarkable achievement considering where the country was just two decades ago.

The international recovery is also accelerating.

China welcomed 35.17 million international visitors in 2025, registering more than 30% year-on-year growth following the relaxation of entry policies. Visitor spending grew even faster, by more than 39%.

Yet one notable gap remains.

Traffic between China and North America has recovered to just 58.9% of pre-pandemic levels, illustrating how geopolitics continues to shape airline flows even as other markets recover.

The world’s largest aviation experiment in digitalization

The most fascinating part of the North Asia briefing wasn’t about planes, airports or routes.

It was about payments.

China has quietly become one of the most advanced digital consumer economies in the world, and aviation is increasingly being reshaped by that reality.

Mobile payment penetration is now approaching 90%. More than 230 million digital yuan wallets have been created, supporting transaction volumes of more than RMB16 trillion.

This changes everything for airlines.

Passengers increasingly expect wallet-based payments, biometric verification, instant checkout and app-driven services. Airlines no longer compete exclusively with other airlines when it comes to customer experience. They compete with Alibaba, Tencent, food delivery platforms, mobility apps and digital banking services.

That distinction is important.

Airlines around the world have been talking about transforming retail for years. It’s already happening in China.

More than 30 airlines and travel aggregators are accelerating retail initiatives, while airlines increasingly view themselves as digital commerce platforms that can sell additional products, bundled services and third-party offers beyond flights.

An emerging trend that is attracting particular attention is cross-selling between competing airlines, a concept that seemed unlikely in many markets just a few years ago.

The implication is profound.

The next battleground in aviation may not be network size. It could be ecosystem participation.

As IATA noted, the competitive question increasingly revolves around whether airlines can integrate into broader digital environments with trusted payments, seamless retail and frictionless customer journeys.

The rise of the C919

Every major aviation market ultimately strives for industrial independence.

China is pursuing this through the COMAC C919.

By the end of 2025, China had 220 domestically produced COMAC aircraft in service, including 31 C919s. While these numbers remain small compared to the Boeing and Airbus fleets, they represent an important milestone in China’s long-term aerospace ambitions.

IATA describes the aircraft as injecting “new vitality” into China’s aviation sector.

The significance extends beyond fleet planning.

The emergence of a credible third global aircraft manufacturer has the potential to reshape competitive dynamics in the aerospace sector for decades to come.

For airlines, extra choice is welcome.

For established manufacturers, it introduces a new long-term competitor with the backing of one of the world’s largest aviation markets.

High-speed rail remains aviation’s biggest competitor

Despite the optimism, China’s airlines face real challenges.

The most obvious one doesn’t come from another airline, but from the train station.

High-speed rail has firmly established itself as the preferred mode of transport for journeys up to 500 miles and is increasingly expanding into longer distance markets.

Few countries have developed rail infrastructure on the scale that China has achieved.

For many travelers, rail offers city center to city center convenience, fewer security procedures and increasingly competitive journey times.

The impact is visible in the aviation economy.

Although passenger volumes continue to rise, returns remain under pressure. According to IATA, the Chinese market continues to show a pattern of “high passenger numbers but low revenues” as airlines pursue volume growth at the expense of pricing power.

It is a challenge that many fast-growing markets face.

The growth is abundant.

Profitability is harder to find.

Safety remains the basis

As growth makes headlines, safety remains the most important measure of success in the industry.

North Asia continues to have one of the strongest security performances in the world.

The region recorded just 0.16 accidents per million sectors in 2025, matching the previous year’s performance and outperforming its own five-year average. The IATA attributes this success to strong regulatory oversight, sustainable investments, rigorous training and a culture that puts safety at the heart of operational decision-making.

It is an achievement that often receives less attention than passenger growth or aircraft orders.

Yet this may be the region’s most important competitive advantage.

The next chapter of sustainability could be written in Asia

One of the most consequential announcements to emerge from the North Asia briefing related to sustainability.

It appears increasingly likely that China will fully participate in CORSIA, the global aviation carbon offset framework, from 2027. Russia is expected to follow a similar path.

This is important because it reinforces the industry’s preference for a single global carbon framework rather than a patchwork of regional schemes.

At the same time, China is rapidly scaling up production of sustainable aviation fuel.

The country currently has about ten SAF producers operating facilities and expects production capacity to exceed two million tons by the end of 2026. New production routes are also being developed, including synthetic e-fuels.

The next five-year plan is expected to include new sustainability measures and SAF targets, potentially accelerating China’s rise as a major player in the decarbonization of global aviation.

For an industry looking for affordable pathways to net zero, these developments will be closely watched.

A new aviation model is emerging

The traditional narrative surrounding Chinese aviation focused on scale.

Scale still matters.

But it no longer tells the whole story.

The market now combines massive domestic demand, growing international connectivity, digital payment ecosystems, biometric travel, retail innovation, indigenous aircraft manufacturing and rapidly developing sustainability infrastructure.

In many ways, China is becoming a laboratory for the future of aviation.

Some experiments will succeed. Others don’t.

But what happens in North Asia is becoming increasingly important far beyond North Asia itself.

The aviation industry has looked west for innovation and leadership for much of the past century.

The talks in Rio showed that the country may also have to look increasingly eastward.

The question is no longer whether China will influence the future of aviation.

The question is how much of that future will be shaped there first.