• Escalating conflict in the Middle East has led to widespread airspace closures across the Gulf, severely disrupting regional carriers while forcing global airlines to suspend services and reroute long-haul flights, increasing journey times and operating costs
• Most non-Middle Eastern airlines are expected to manage the direct operational impact, as traffic to the region represents a relatively small share of total volumes, although prolonged disruption could create wider network and cost pressures
• The most significant risk is a sustained rise in jet fuel prices, which typically account for 20 percent to 30 percent of operating costs, potentially squeezing margins and credit profiles if airlines cannot fully pass higher costs on to passengers

Global airlines are facing renewed disruption after coordinated strikes by the United States and Israel on Iranian military targets on 28 February 2026 triggered a swift retaliation from Tehran, sending shockwaves through one of the world’s most critical aviation corridors

The escalation has forced the temporary closure of airspace over Iran, Iraq, Kuwait, Israel, Bahrain, the United Arab Emirates and Qatar, paralysing major international gateways including Dubai, Abu Dhabi and Doha

Aircraft have been grounded, crews stranded and thousands of passengers left scrambling as airlines suspend services and redraw global route maps almost overnight.

Yet despite the dramatic scenes across the Gulf, analysts at Morningstar DBRS believe most global carriers can withstand the direct operational impact — at least for now.

Gulf carriers under acute pressure

Airlines based in the Middle East are bearing the brunt of the crisis. Their business models rely heavily on the Gulf’s mega-hubs, which function as pivotal transit points linking Europe, Asia, Africa and Australasia. With those hubs effectively offline, schedules have been sharply curtailed and network connectivity severely impaired

If the conflict drags on, the credit profiles of regional carriers could come under strain as revenue losses mount and fixed costs persist

Global ripple effects

For airlines headquartered outside the region, the disruption is more contained but still significant. Carriers with direct exposure to Middle Eastern destinations have suspended most services, while aircraft and crew caught in affected airspace have created knock-on effects across broader networks

The closure of large swathes of Middle Eastern skies presents a further operational headache. With Russian airspace already off-limits to many operators, long-haul flights between Europe and Asia must now take longer alternative routings. The result: extended flight times, increased fuel burn and mounting cost pressures

Rerouting options, analysts warn, could become increasingly constrained if hostilities persist, potentially amplifying congestion and inefficiencies across remaining viable corridors

Still, for most major global airlines, direct Middle Eastern traffic represents only a modest proportion of overall volumes, suggesting the sector has sufficient resilience to navigate short-term disruption

The bigger threat: Fuel

Beyond immediate operational upheaval, the more consequential risk lies in energy markets.

Jet fuel typically accounts for around 20 percent to 30 percent of airline operating costs

The sector has benefited in recent years from relatively stable pricing, which has supported margins despite softer passenger yields in some markets

Any sustained spike in crude oil and jet fuel prices would therefore have material implications for profitability. In a fragile macroeconomic climate, airlines may struggle to pass higher costs fully on to passengers, raising the prospect of margin compression and pressure on credit metrics

Even carriers with limited exposure to Middle Eastern routes — including US low-cost operators — would not be immune if fuel costs were to rise sharply and remain elevated

A sector accustomed to shocks

The aviation industry is no stranger to geopolitical turbulence. Over the past quarter-century, airlines have weathered terrorist attacks, pandemics, financial crises and regional wars. Each episode has tested balance sheets and business models, yet the sector has repeatedly demonstrated an ability to adapt.

This latest crisis appears, for now, to be another severe but manageable shock for most global players. The decisive variable will be duration: the longer airspace closures and market volatility persist, the greater the strain on earnings, liquidity and ultimately credit quality.

For passengers, the disruption means longer journeys and fewer options. For airlines, it is a reminder that in a tightly interconnected global system, conflict in one region can reverberate thousands of miles away — and that fuel, as ever, remains the industry’s most combustible variable.

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