NEW DELHI (Reuters) - An unpredictable trade war and daunting environmental targets are on the agenda for global airline bosses at an annual summit in India, as the industry's outlook is clouded by concerns that geopolitical uncertainty will dampen travel demand and raise costs.

More people are flying than ever before after a full post-pandemic passenger market recovery, but airlines globally are facing rising cost pressures, extended plane delivery delays, lingering supply chain bottlenecks and falling airfares.

On top of this, President Donald Trump's evolving trade war has upended the global aerospace industry's decades-old tariff-free status and added a new layer of volatility and risk.

While carriers in Europe and Asia report strong demand for flying, the U.S. airline sector has been hit by a recent slump in travel demand, with carriers struggling to forecast passenger behaviour and operational costs.

The influential International Air Transport Association (IATA), which represents more than 300 airlines and over 80% of global air traffic, will hold its annual three-day meeting from Sunday in New Delhi.

The summit, hosted by India's largest carrier IndiGo, comes as the world's third-largest air passenger market rapidly expands its aviation industry, and as air travel growth in Asia is expected to outstrip Europe and North America for the next few decades.

India's recent hostilities with neighbour Pakistan, which is causing Indian airlines to take large, expensive detours around Pakistani airspace, highlights how conflict zones are an increasing burden on airline operations and profitability.

IATA said in February that accidents and incidents related to conflict zones are a top concern for aviation safety requiring urgent global coordination.

Aviation safety will also be in focus after a spate of air accidents in Kazakhstan, South Korea and North America over the past six months, and rising concerns about air traffic control systems in the United States.

NET-ZERO DOUBTS

IATA has increasingly been warning that airlines will not meet their sustainability goals, and that it is not clear how the transition to sustainable aviation fuel (SAF) and new technologies will be financed.

Airlines agreed in 2021 to target net-zero emissions in 2050 based mainly on a gradual switch to SAF, which is made from waste oil and biomass and costs more than conventional jet fuel.

IATA Director General Willie Walsh has in recent weeks said the industry will need to re-evaluate the commitment.

Airlines are being expected to bear the cost of the more expensive fuel and are not getting the support they need from SAF manufacturers, Walsh has said. Delays by Airbus and Boeing ( BA ) in delivering new, more fuel-efficient aircraft are also causing headaches for airlines.

IATA said 1 million metric tons of SAF was produced globally in 2024, below forecasts of 1.5 million tons, and described production as disappointingly slow.

"Demand for SAF continues to outstrip supply, and costs remain prohibitively high. Regulatory frameworks to encourage SAF production are still underdeveloped, inconsistent, or insufficient," said Subhas Menon, the director general of the Association of Asia Pacific Airlines.