With the Iran war in its third week and developments pointing towards escalation rather than resolution, the global airline sector is adapting to a string of challenges.
With the Iran war in its third week and developments pointing towards escalation rather than resolution, the global airline sector is adapting to a string of challenges.
For carriers in and around the Middle East, there are immediate concerns – a limited resumption of flights is being disrupted by continued attacks from Iran – and more fundamental ones regarding a path out of this crisis, including what shape a recovery will take. In the case of the latter, passenger demand has recovered strongly from previous crises around the world, but no one will be taking anything for granted.
For many carriers, soaring oil prices mean guidance for 2026 issued only weeks ago is now obsolete. Heavily hedged airlines will be more relaxed for the time being, but higher oil prices will cause negative ripples beyond jet fuel costs, including through higher inflation. The handful of international carriers to have reported earnings since the crisis began have also highlighted strong demand on services that would otherwise have been operated by the big Gulf connectors, helping to offset higher costs and showing that crises also bring opportunities for some.
But for any carriers serving markets between Europe and Asia-Pacific and vice versa – except those that can still overfly Russia, such as the Chinese majors – the narrowing airspace corridors are being watched nervously, as an escalating conflict brings the very real risk of some destinations falling out of reach.
Carriers everywhere will also be looking out for any worsening of the supply-chain challenges that have clouded the post-Covid period.
The coming week will see more airlines offer their view on events, including at the annual gathering of Europe’s biggest airlines in Brussels for the A4E Aviation Summit.
Lufthansa Group chief executive Carsten Spohr, speaking on 6 March after the war began, already gave a strong hint of what Europe’s big carriers might want from regulators considering the latest crisis.
He insisted that the shutdown of a significant proportion of global commercial aviation’s intercontinental capacity should be a wake-up call for the European Union, which is putting the competitiveness of the region’s carriers at risk through its Green Deal policies, he argued.
“The war in the Middle East proves once again how exposed air traffic is and how vulnerable it remains, even though the industry is now more resilient to crises than it used to be,” he stated.
“The massive concentration of global traffic flows via the Gulf hubs is increasingly proving to be a geopolitical Achilles’ heel. This makes it even more important not to further disadvantage European airlines and hubs.”
