The global airline industry is facing its most serious disruption since the Covid-19 pandemic, as the ongoing Middle East conflict is hitting markets, operations and fuel supply chains. According to the Financial Times, more than $50 billion has been wiped off the value of major airlines, while rising fuel costs and airspace restrictions are forcing carriers to rethink routes.
As the war enters its fourth week, airlines are struggling to cope with a sharp rise in jet fuel prices, which have surged significantly in a short span of time. The impact is already visible for passengers, with ticket prices expected to rise in the coming months as airlines try to protect already thin profit margins.
One of the biggest challenges facing airlines right now is the cost of fuel. Jet fuel, which makes up nearly a third of airline expenses, has surged sharply since the conflict began. Executives say the spike is even more severe than previous shocks.
“Fuel spiked quite heavily after the Ukraine invasion in 2022 as well, but this has gone further north,” easyJet chief executive Kenton Jarvis told the Financial Times. He described the situation as the most serious disruption since the pandemic grounded flights globally.
Even airlines that hedge fuel costs are feeling the pressure. With margins already tight, many carriers say they have no option but to increase ticket prices. Lufthansa chief executive Carsten Spohr warned that higher fares are unavoidable, saying, “Our average profit is about €10 per passenger, there’s no way you can absorb the additional cost.”
BILLIONS WIPED OUT AMID CONFLICT
The financial hit has been severe. According to the report, the world’s 20 largest publicly listed airlines have collectively lost around $53 billion in market value since the conflict began. Investors are increasingly betting that airline stocks could fall further if the crisis continues.
Low-cost carrier Wizz Air has become the most shorted stock on the FTSE 100, while easyJet has also seen increased investor pressure.
The impact is most visible in the Middle East, where major hub airlines such as Emirates, Etihad and Qatar Airways have been forced to cut schedules due to airspace closures and falling demand. According to industry experts, the region has become the epicentre of the crisis.
“For the guys in the Middle East, this is a big crisis,” Willie Walsh, head of airline body IATA, said, according to the Financial Times. He compared the situation to the drop in demand seen after the 9/11 attacks, when transatlantic travel declined sharply.
Analysts warn that airlines without strong government backing could face serious financial trouble if the disruption continues. Some carriers are already preparing contingency plans, including reducing flights on certain international routes.
SUPPLY CHAINS AND CARGO UNDER STRAIN
The disruption is not limited to passenger travel. Air cargo operations are also being affected as goods shift from sea routes to aircraft due to shipping disruptions. This has led to congestion at major airports and logistical challenges across the supply chain.
Some airports are struggling to handle the surge in cargo demand, forcing goods to be rerouted to other locations. At the same time, airlines are preparing for the possibility of fuel shortages, which could further disrupt global travel and trade.
Despite the current crisis, some industry leaders remain cautiously optimistic. Jarvis said airline stocks could recover quickly if a ceasefire is announced.
Meanwhile, the Middle East conflict has entered a more volatile phase as US President Donald Trump issued a direct threat to strike Iran’s power plants if Tehran does not fully reopen the Strait of Hormuz within 48 hours. Iran’s Revolutionary Guards responded that if Trump follows through on his threat, energy sites in countries hosting US bases would become “lawful” targets, and warned that the Strait of Hormuz could be completely closed.
