Problems in the aviation industry began right after the United States and Israel attacked Iran. Many carriers had to cancel flights, and airports in the conflict area limited aircraft handling, often to the bare minimum. There were moments when ports were closed. All of this began to lead to increasingly serious problems that airlines have to deal with. In some cases the situation becomes truly difficult. This can lead to their collapse.
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The geopolitical situation is hitting aviation
The war in Iran has become a cause of problems that carriers worldwide, including the biggest ones that have so far recorded huge profits, must face.
Gediminas Ziemelis, a Lithuanian entrepreneur and founder of Avia Solutions Group, said in an interview with Bloomberg that the industry must be ready for every scenario.
If the situation lasts longer than a month, we may witness the first airline bankruptcies,” Gediminas Ziemelis said in an interview with the American agency.
All because of the geopolitical situation, which has driven fuel prices to an unprecedented level. And that is not the only problem. Fuel is becoming scarcer on the market. Disruptions in supplies have caused aircraft fuel refining to drop significantly, which translates into lower availability. Some experts in the aviation market believe that if the war in Iran continues, it could lead to a situation where fuel simply starts to run out. That will obviously affect the price. It is already much higher than before the conflict began. Oil prices have risen by about 50% since then, and the barrel price remains above $100. It is worth noting here that fuel costs are about 25% of flight operating costs.
Some airlines expect the war to end soon, and after temporary declines, the industry will recover. They cite the situation just six years ago, when the COVID-19 pandemic hit and the entire industry faced a crisis, after which airlines recovered losses and recorded record profits.
Sometimes a crisis is an opportunity,” Gediminas Ziemelis said in an interview with Bloomberg.
Airlines are reducing the number of routes
Due to the situation in the Middle East, airlines were forced to reduce the number of routes. Part of this was due to safety reasons, and part also due to economic reasons. It is not only about rising fuel prices but also fewer passengers, especially on Middle Eastern routes. Flight bookings fell by as much as 63%.
This problem does not only affect this region. Lower interest in flights is also seen in Southern Europe. Problems affect Greece, Cyprus, and Turkey, among others. According to the American company AirDNA, which tracks bookings, the decline in this region is evident. Regarding Cyprus, hotel booking declines were as high as 40% compared to the pre-war period. Declines, although smaller, are also noticeable in Greece and Turkey.
Some airline representatives say outright that soon limiting connections may become necessary, not because of their profitability but because of fuel problems, which I have already mentioned. Michael O’Leary, CEO of Ryanair, openly says this, pointing to shortages of aviation fuel in Europe. As the Irish airline CEO emphasizes, business travel may need to be limited to the bare minimum to also adjust the number of routes. For now, Ryanair does not foresee sharp ticket price increases. They are expected to rise by about 3-4% compared to spring 2025.
See also: Transport prices explode. The war in the Middle East hits everyone
