War triggers ‘global aviation crisis’ as oil surges and airspace closures drive ticket prices higher
The expanding US-Israel-Iran war has forced widespread airspace closures, flight diversions, cancellations and airport disruptions, while oil prices surge—creating one of the aviation industry’s most severe crises since Covid-19 and pushing fares higher, especially on routes linked to Middle East hubs.
The war between the United States, Israel and Iran is spreading across the Middle East. Air strikes have forced airspace closures, while oil prices are surging—creating a domino effect that has become a “global aviation crisis”, described as one of the most serious since the Covid-19 pandemic.
The situation is driving route changes, flight suspensions, airport closures and higher fares—now seen as a major turning point for the global aviation industry.
Jet fuel is the lifeblood of aviation. Fuel typically accounts for 25%-35% of total operating costs. Even a small price increase can wipe out airline profits on a huge scale.
With conflict intensifying between Iran and US bases in the Persian Gulf, global concerns about oil shortages have risen further. Analysts warn that if unrest drags on, jet fuel prices could spike rapidly and sharply, directly hitting airlines.
The website Discovery Alert reported that in an extreme oil price surge, a mid-sized airline consuming an average of 5,000 barrels of fuel per day would face an additional cost burden of about US$700,000 to US$1,050,000 per day (roughly 25-38 million baht per day) compared with normal oil-price conditions.
If the situation lasts for an entire year, the cumulative cost—from the oil price differential alone—would reach US$255-384 million, or about 9-13 billion baht.
The website Euronews reported that airspace closures and war-risk concerns have led to flight cancellations and route suspensions.
Air New Zealand has cut flights by 5%, cancelling around 1,100 flights, affecting more than 44,000 passengers from March 16 to May 3. Finnair has cancelled flights to Doha and Dubai until March 29, and is avoiding the airspace over Iraq, Iran, Syria and Israel.
Worse still, once airspace closures force cancellations or diversions, costs multiply: detours mean longer flight times, higher fuel burn and more complex operational management.
Ultimately, the impact is likely to land on passengers, who can expect higher airfares as airlines pass on rising costs in ticket prices—especially on routes that normally fly through or connect via Middle East hubs.
After jet fuel prices more than doubled within a month, many airlines have had to push costs into fares. Cathay Pacific has revised fuel surcharges on all routes from March 18.
Thai Airways expects ticket prices to rise by 10%-15%. Air New Zealand has introduced clear distance-based fare increases, with long-haul routes rising by as much as NZ$90 (about 1,600 baht).
ME3 giants face a major storm
The aviation information hub The Aviation Hub said that within hours of the first wave of strikes, no airlines were hit harder than the “ME3” group—the Middle East’s three aviation giants: Emirates, Etihad Airways and Qatar Airways. Their business model relies heavily on Persian Gulf airspace as the backbone of long-haul connections through hubs such as Dubai, Abu Dhabi and Doha.
At least 10 countries partially or fully closed their airspace, forcing the ME3 airlines to cancel, reroute or delay hundreds of flights abruptly—immediately inflicting severe damage on a business model that had delivered enormous profits.
The Aviation Hub said what looked like a short-term disruption has snowballed into a complex financial crisis that is difficult to resolve, driven by four simultaneous shocks:
- Mass cancellations as the war disrupts key corridors linking Europe, Asia and Oceania.
- Spiralling costs as detours lengthen flight times and burn more fuel.
- Crew-management problems, as airspace conditions change constantly and unpredictably, making rosters for pilots and cabin crew difficult to plan.
- Eroding passenger confidence—especially among travellers relying on connections—due to uncertainty.
But the impact is not confined to the Middle East. These airlines are effectively “major arteries” connecting people worldwide. When their operations stall, the shock ripples across the entire aviation ecosystem—from European tourists and Asian business travellers to Africans living overseas—who face higher fares and fewer travel options.
Global aviation bears the risk of a prolonged war
If the war drags on, the damage to the global aviation industry will become deeper and more severe. Estimates suggest that in a worst-case scenario, total losses could exceed US$1 billion, creating long-term risks across five dimensions:
- A permanent rerouting of global flight networks: Airlines may permanently avoid Middle East airspace, forcing longer detours that consume more time and fuel. Popular stopover points in the Persian Gulf could lose importance, reshaping global air-traffic flows.
- A shift in aviation power centres: As hubs such as Dubai, Doha and Abu Dhabi face constraints, passengers may move to alternative gateways such as Istanbul, Singapore, or major European hubs. This shift in budgets and customer flows could reshape competition for years.
- Airport revenues plunge: Airports across the Middle East and South Asia risk losing major revenue streams—from passenger fees and landing charges to duty-free sales. One clear example cited is Dhaka, Bangladesh, where flights to the Middle East have reportedly been cancelled by almost half, triggering knock-on effects for hotels and tourism businesses.
- Cargo disruption: It is not only passengers. Air freight is also facing a crisis, especially for goods that normally transit through Persian Gulf hubs. Delays and stoppages are rippling through other industries—from pharmaceuticals and medical supplies to time-sensitive electronics.
- Rising costs: Airlines face heavier burdens from sharply higher war-risk insurance premiums for flights operating near conflict zones.
Global politics reshapes aviation
The widening war is disrupting thousands of flights and placing immense pressure on aviation ecosystems across every continent—forcing near real-time adaptation amid dangerous and unpredictable global politics.
This crisis has been driven by a “three-storm” convergence: soaring oil prices, longer routes caused by detours, and more expensive war-risk insurance. All three hit airline profitability—and the costs are now being passed on to passengers through higher fares, fewer connection options, and persistent uncertainty.
If the situation continues, the world could see a permanent restructuring of global aviation. Even if the war ends, flight behaviour may never return to what it was: new hubs may rise elsewhere, global corridors may shift, and airlines may rework financial strategies to cope with long-term volatility.
The aviation industry is now confronting a major test—balancing still-strong demand for global connectivity against a dangerous, uncertain geopolitical environment. The coming months will be a critical measure of whether airlines can adapt quickly enough to stay afloat through this crisis.
