European airlines are facing their biggest challenge since the COVID-19 pandemic as the Iran war pushes up jet fuel prices and buffets travel through the Middle East, casting a shadow over the summer holiday season.
Carriers have been largely riding out the crisis with hedges that have tamed costs even as the price of jet fuel has risen nearly 84% since the start of the conflict on 28 February.
"There is a risk that we'll see rationing of fuel supply, particularly in Asia and Europe," Willie Walsh, head of the International Air Transport Association said.
Walsh said, however, that the situation was not yet as bad as the disruption caused by the COVID-19 pandemic in 2020, which led to travel demand plummeting and hundreds of billions of dollars in losses for the aviation sector.
"I think COVID was on a completely different scale," Walsh added.
Jet fuel price hedges start to run out
The war has hit airline shares, with on-again-off-again peace talks to end the conflict and re-open the critical Strait of Hormuz to normalise global oil and gas flows in what is the worst energy crisis in decades.
Airlines are now warning about their hedges, which help lock in set prices - running out, with outlooks increasingly murky as people delay booking travel or make plans closer to home to avoid potential disruption and higher fares.
Sweden's Energy Minister Ebba Busch on Tuesday fired an "early warning" about potential jet fuel shortages despite good current supply, cautioning Swedes to think through travel plans.
European budget airline Wizz Air CEO József Váradi said on Monday that summer bookings were strong. However, easyJet and tour operator TUI announced declines in forward bookings and issued profit warnings in recent weeks.
Váradi, meanwhile, cautioned that even an end to the conflict would not quickly resolve high fuel prices.
"Even if the war is stopped in Iran, I don't think this is going to put the fuel price back to what it used to be two months ago," he told reporters in London.
Winners and losers
Gulf airlines have been the hardest hit, with data from Cirium Ascend showing that flights operated by Middle Eastern operators dropped 50% year-on-year in March, while bookings for Q2 and Q3 connecting via the main Gulf hubs are down 42.5%.
Global passenger capacity, however, remains up near 2% so far in 2026 versus 2025, it said, underscoring wider resilience.
The crisis has though dampened margins and sharpened the gap between weaker and stronger players.
Some have dodged the impact. Finland's flag carrier Finnair said the crisis had so far had a net positive impact with more demand for its Asian flights. Budget airline Norwegian on Tuesday brushed off jet fuel supply risks.
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Four people were killed, including a child, in Ukrainian strikes on the Russian port city of Novorossiysk overnight, according to the governor of the Krasnodar region. Ukraine's drone forces commander, Robert Brovdi, said Russian military ships were destroyed in the attacks.
Wildfires have broken out in Türkiye’s Antalya province, forcing hundreds of people to evacuate as strong winds fuelled the flames.
A TV channel was struck during a live broadcast on Tuesday, Ukrainian President Volodymyr Zelenskyy said, as Russian strikes on Kyiv killed at least three people, the city's Mayor Vitali Klitschko said. Meanwhile, drones hit civilian infrastructure in Russia's southwestern Saratov region.
Overnight Iranian strikes on an air base in Jordan damaged multiple U.S. aircraft and left one without a wing, American media reported. Meanwhile, explosions were heard across parts of southern Iran according to local media reports.
U.S. Central Command (CENTCOM) said its forces destroyed five Iranian crude oil carriers after the Islamic Revolutionary Guard Corps (IRGC) allegedly launched two ballistic missile attacks against a U.S. Navy warship over the past two days.
Saudi Arabia is now facing pressure from both ends of the Arabian Peninsula. While the crisis around the Strait of Hormuz is disrupting Gulf shipping and energy flows, fighting has intensified in western Yemen, bringing the Houthis back into direct confrontation with the kingdom.
Iran has warned it will retaliate against any future U.S. attacks, saying American energy interests and infrastructure across the Gulf could become targets in a further escalation of the conflict.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf said on Sunday that the United States must recognise that the “rules of the game” in its war against Iran had changed “before it is too late”, a day after Washington struck several Iranian tankers in the Gulf.
An Iranian tanker was hit by U.S. forces on Saturday near Iran's key oil export hub, Kharg Island, in the Gulf, the semi-official Iranian news agency Tasnim reported.
U.S. efforts to squeeze Iran’s economy through an oil blockade and sanctions are becoming increasingly difficult for Tehran to withstand, according to three senior Iranian sources. Washington is escalating pressure in hopes of securing concessions in future negotiations.
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