Airlines in the Middle East are expected to fall into collective losses in 2026 as regional conflict, airspace disruptions and sharply higher fuel prices weigh on the global aviation industry, the International Air Transport Association (IATA) said on Wednesday.
The region is projected to be the only part of the world’s aviation market to record a net loss next year, even as airlines elsewhere remain profitable, though at significantly reduced margins.
According to IATA’s latest industry outlook, global airline profits are expected to decline from $45 billion in 2025 to $23 billion in 2026, as rising operating costs and geopolitical instability reshape the sector’s financial outlook.
Net profit margins are forecast to narrow from 4.2 percent to about 2 percent, underscoring what the industry body described as a “sharp deterioration” in financial performance.
“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” said Willie Walsh, IATA’s director general.
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He said carriers globally are facing a near 70 percent increase in jet fuel prices, forcing airlines to absorb higher costs despite attempts to pass some of the burden on to passengers through fare adjustments and efficiency gains.
At the regional level, Walsh said all aviation markets are expected to remain in the black except the Middle East, where the impact of conflict and operational disruption is particularly severe.
“The Gulf carriers face operational uncertainty following a near-complete shutdown of airspace at the outbreak of the war,” he said. “These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”
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The Middle East aviation sector has been particularly exposed to the fallout from the ongoing U.S.-Israeli war with Iran, which has disrupted air routes, reduced passenger flows and increased insurance and security costs for airlines operating across the region.
IATA said global fuel costs are expected to rise significantly in 2026, with total industry fuel expenditure projected to increase from $252 billion in 2025 to $350 billion next year.
Fuel is expected to account for more than 31 percent of total airline operating costs, compared with 25.4 percent a year earlier, reflecting both higher crude oil prices and elevated refining margins.
The forecast is based on an average Brent crude price of around $95 per barrel in 2026, compared with $69 per barrel in 2025. Jet fuel prices are expected to average US$152 per barrel, significantly higher than last year’s levels.
Despite widespread hedging strategies that cover roughly one-third of global fuel consumption, airlines remain highly exposed to sustained price increases, the industry body said.
Global fuel consumption is expected to remain broadly stable at around 104 billion gallons in 2026, meaning that higher prices, rather than higher demand, are driving the surge in costs.
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IATA warned that profitability per passenger is expected to fall to $4.50 globally, nearly half the level recorded in 2025, underscoring the financial pressure facing the sector.
The Middle East is expected to bear the brunt of these challenges due to its central role in global air transit and its proximity to conflict zones.
Capacity reductions, frequent flight cancellations and rerouting of aircraft have increased operating costs, while reduced transfer traffic has weakened load factors on long-haul routes that are critical to Gulf carriers’ business models.
The association said these combined pressures are likely to push regional airlines into losses despite ongoing efforts by Gulf carriers to maintain extensive international connectivity networks.
Analysts say the outlook highlights how deeply geopolitical instability in the Middle East is now feeding into global transport, trade and tourism, with aviation among the most exposed sectors.
