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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The U.S.-Israeli war with Iran and the closure of the Strait of Hormuz have triggered the largest oil supply disruption ever recorded in terms of daily output losses. However, Reuters calculations show that at least one past crisis had a greater cumulative impact over time.
The U.S. Navy has forcibly intercepted and boarded the Iranian cargo ship TOUSKA in the Gulf of Oman after it attempted to breach the ongoing naval blockade. President Trump confirmed that the vessel was neutralised and seized by Marines following a direct strike on its engine room.
Some 20,000 seafarers remain stranded on around 2,000 ships in the Strait of Hormuz amid the ongoing Middle East conflict, in what has been described as an unprecedented situation in the post-Second World War era. The vessels include oil and gas tankers, cargo ships and six cruise liners.
Stock markets across Asia fell on Monday as escalating conflict involving Iran drove oil prices sharply higher, fuelling fears of inflation and a potential global recession, with investors reacting to disruption risks in the Strait of Hormuz and prolonged hostilities.
Bulgaria has won the Eurovision Song Contest for the first time, taking victory in a final overshadowed by a boycott over Israel’s participation and the war in Gaza.
The World Urban Forum (WUF13) continues in Baku, Azerbaijan on 18 May, addressing the global housing crisis. The day’s agenda includes the official opening press conference, the WUF13 Urban Expo opening and a ministerial dialogue on the Nairobi Declaration to advance Africa's urban agenda.
U.S. President Donald Trump said on Monday he had paused a planned attack on Iran after appeals from the leaders of Qatar, Saudi Arabia and the United Arab Emirates, allowing negotiations to continue over a possible deal to end the conflict.
U.S. President Donald Trump says China's Xi Jinping agreed Iran must reopen the Strait of Hormuz, as Tehran prepares a new shipping mechanism. Tensions over the U.S. blockade and stalled nuclear talks continue to disrupt global oil supplies.
A 5.2 magnitude earthquake struck China’s Guangxi region early on Monday, killing two people and forcing more than 7,000 residents in Liuzhou to evacuate as rescue efforts continued.
G7 finance ministers voiced growing concern over rising public debt and volatile bond markets as they met in Paris on Monday following a global sell-off driven by fears that the Iran conflict could fuel inflation.
U.S. President Donald Trump said on Monday he had paused a planned attack on Iran after appeals from the leaders of Qatar, Saudi Arabia and the United Arab Emirates, allowing negotiations to continue over a possible deal to end the conflict.
U.S. President Donald Trump says China's Xi Jinping agreed Iran must reopen the Strait of Hormuz, as Tehran prepares a new shipping mechanism. Tensions over the U.S. blockade and stalled nuclear talks continue to disrupt global oil supplies.
U.S. President Donald Trump said Washington could destroy Iran’s infrastructure “in two days,” while Tehran warned the U.S. would face growing economic costs from the conflict. The remarks came as Hezbollah reported new attacks on Israeli forces despite an extended Lebanon ceasefire.
Israel and Lebanon have agreed to a 45-day extension of a ceasefire that has reduced fighting between Israel and Hezbollah in southern Lebanon. The agreement came as two days of Washington-facilitated talks concluded with a decision to hold further meetings in the coming weeks.
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