Iran war pushes Middle Eastern airlines towards $4.3bn loss in 2026
In early 2026, the United States and Israel conducted airstrikes against Iran, prompting retaliatory attacks by Iran on U.S. military bases in the Gulf, including locations in Qatar and the UAE. Several major international airports in the region, such as Dubai, Abu Dhabi, Kuwait, and Bahrain, were targeted, leading to the closure of airspace in these countries for safety reasons. The conflict disrupted regional aviation significantly, resulting in reduced passenger and cargo demand, fewer private jet flights, and increased jet fuel costs globally. According to the International Air Transport Association (IATA), the projected net profit for Middle Eastern airlines was expected to be $7.2 billion in 2025 but is now forecast to turn into a $4.3 billion net loss in 2026. Major regional carriers like Emirates, Etihad, and Qatar Airways have partially resumed operations, though not at full capacity, while many European and Asian airlines continue to suspend flights in the area. The European Union Aviation Safety Agency has issued advisories cautioning against flying over certain regions until August 2026, further limiting travel choices for passengers.
Iran's escalating conflict with the United States and Israel has triggered a seismic shift in the Middle Eastern aviation sector, pushing the industry toward a projected $4.3 billion net loss in 2026, according to the International Air Transport Association’s (IATA) June outlook. The conflict began on 28 February 2026, when the U.S. and Israel launched air strikes against Iran, prompting retaliatory attacks by Iran near U.S. military bases in the Gulf, including locations in Qatar and the UAE. These strikes targeted several key international airports, notably Dubai, the world’s busiest for international travelers, as well as Abu Dhabi, Kuwait, and Bahrain. In response, the UAE, Qatar, Bahrain, and Kuwait temporarily closed their airspaces to ensure safety, though these restrictions were gradually lifted over the following week as tensions eased. The ongoing war has significantly disrupted regional air travel, leading to a decline in both passenger and cargo demand, along with a reduction in private jet operations. High jet fuel prices have further compounded the challenges faced by airlines. While most major regional carriers have resumed operations, such as Emirates, Etihad, and Qatar Airways, they are not operating at full capacity. Emirates CEO Tim Clark noted that his airline’s planes are currently flying at three-quarters of normal capacity. Meanwhile, European and Asian airlines continue to suspend flights in the region, with Air France planning to resume operations in late August, Lufthansa in September, and British Airways, Cathay Pacific, and Singapore Airlines aiming for late October. Air Canada has indicated it will not return to the region before mid-January 2027, and several other airlines have yet to announce specific resumption dates. Despite some reopenings, regional airspaces remain subject to intermittent closures and disruptions. The EU Aviation Safety Agency recently advised operators to avoid the airspace of Bahrain, Kuwait, Qatar, the UAE, and parts of the Gulf of Oman until 31 August 2026. This has severely limited traveler choices, exemplified by the scarcity of flight options between the UAE and London in September, which include only Emirates to Dubai, Etihad to Abu Dhabi, or Air Arabia to Sharjah. Similarly, flights between Doha and Tokyo during the same period are restricted to Qatar Airways alone. The war has placed considerable pressure on the hub-and-spoke model that Gulf airlines rely upon. This model centers on connecting carriers that operate through major hubs in Dubai and Doha, enabling passengers to access global destinations via these central points. Naveed Kapadia, an aviation lecturer at Buckinghamshire New University, explained that while the reduced competition allows airlines like Qatar Airways and Emirates to capture more market share and maintain stronger fares, they remain heavily dependent on efficiently moving large volumes of passengers through these hubs. According to IATA data, Middle Eastern passenger demand dropped by 13.9% compared to the previous year, even as direct traffic between Europe and Asia increased by 11%, highlighting growing strains on the Gulf carriers’ business model. These operational shifts have led to rising costs across the industry. Longer or less efficient flight routes require greater fuel consumption, extended crew duty times, and lower aircraft utilization. Additionally, the need to carry extra fuel due to potential disruptions further reduces the amount of passenger or cargo space available. As the situation continues to evolve, the impact on the Middle Eastern aviation sector is likely to persist, reshaping the landscape of international air travel for years to come.
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