With aviation across the Middle East heavily disrupted after attacks by Israel and the US on Iran and Iran’s retaliatory strikes across the region, airlines were forced to cancel flights, reroute aircraft, and suspend services.

Airspace closures across Iran, Israel, Iraq, Qatar, Bahrain, Kuwait, and Syria halted large parts of regional traffic. Partial restrictions also impacted operations in the UAE and Saudi Arabia.

Aviation analytics firm Cirium said more than 23,000 flights have been cancelled since Feb. 28. Of roughly 36,000 flights scheduled to operate to or from the Middle East over that period, more than half were cancelled, cutting about 4.4 million seats.

Fitch Ratings said the length of the disruption will determine the hit to airlines, airports, and tourism. Fitch expects the conflict to last less than a month, which should limit pressure on Fitch-rated issuers, but said a longer conflict could strain less diversified businesses.

Hub airports, including Dubai, Abu Dhabi, and Doha, have seen schedule changes and congestion as carriers adjust routes. Between Feb. 28 and March 5, seven regional airports cancelled more than 15,000 flights, impacting over 1.5 million passengers, according to Fitch.

Airlines face losses, costs

Fitch said airlines lose revenue when flights cannot operate, and carriers with hubs in affected countries face the greatest exposure because their networks depend on regional airspace. Operations over the UAE and Qatar appear particularly constrained.

Costs also rise when aircraft detour around closed airspace, extending flight times and fuel burn. Fitch cited added expenses from technical stops, crew overtime, accommodation, and airport handling. Airlines may also pay for meals, hotels, refunds, or vouchers for disrupted passengers. Passenger compensation is expected to be limited because the disruption stems from geopolitical conflict outside airline control, which means that airlines may not be held liable for compensating passengers as they would be in cases of operational issues within their control.

Tighter capacity can lift fares on affected routes, which may offset some lost revenue, but this increase in fares may not fully compensate for the overall financial impact of the disruptions caused by geopolitical conflicts. Oil prices are another swing factor. Fitch said many airlines hedge fuel, typically covering about 50% to more than 80% of needs over the next three months across Europe, the Middle East, and Africa.

GCC tourism to drop?

Oxford Economics estimates international arrivals to the region could fall 11% to 27% in 2026, depending on how long the conflict lasts. That implies 23 million to 38 million fewer visitors than previously expected and a $34 billion to $56 billion hit to tourism spending.

Oxford Economics outlined two scenarios: disruption lasting one to three weeks, or hostilities continuing for about two months. Gulf Cooperation Council economies could see the largest drop in visitor numbers because they attract the biggest share of regional tourism. The UAE and Saudi Arabia are particularly exposed due to their large markets and reliance on aviation links, which makes them vulnerable to significant economic impacts from reduced regional tourism and potential travel restrictions during the conflict.

Israel and Iran are expected to see the steepest percentage declines because the conflict is concentrated there. Compared with earlier forecasts, inbound arrivals to Israel could fall 57%, while arrivals to Iran could decline 49%.

Impact beyond airlines

Fitch said the disruption also affects airports, hotels, insurers, and aircraft lessors. European airports may lose revenue and retail spending from weaker Europe-Asia flows, though some may offset declines through parking income or regulatory protections tied to traffic volatility.

Global lodging groups with diversified portfolios mostly run hotels with Middle East exposure, which Fitch said should help them absorb booking disruption. Aircraft lessors are expected to face limited impact because fleets are globally diversified and lease revenues are usually secured by long-term contracts.

Aviation analysts say travel patterns often recover once airspace restrictions lift, and Middle Eastern hubs remain strategically positioned between Europe, Asia, and other long-haul markets.

Source: Gulf News