The Middle East aviation sector may be facing one of its toughest operating environments in decades, but industry experts believe the current crisis is more likely to reinforce the strategic importance of Gulf carriers than diminish it.
Aviation industry expert argue that Gulf carriers have historically demonstrated greater adaptability than many traditional airlines during periods of disruption, supported by modern fleets, strong hubs and government-backed aviation strategies. He has also noted that countries such as the UAE and Saudi Arabia continue to view aviation as a strategic driver of economic growth despite current geopolitical challenges.
The latest forecast by the International Air Transport Association (Iata) paints a sobering picture for the global airline industry, with profits expected to halve this year as airlines grapple with the twin challenges of Middle East conflict-related disruptions and soaring fuel costs. Yet analysts argue that the UAE and its Gulf neighbours remain better positioned than most global competitors to weather the turbulence and emerge stronger once geopolitical tensions ease.
Iata expects global airline net profits to decline to $23 billion in 2026 from $45 billion in 2025, while industry-wide profit margins are projected to shrink to just 2.0 per cent from 4.2 per cent. The association expects the Middle East to be the only aviation region to collectively slip into losses as airspace restrictions, rerouting costs and fuel inflation weigh heavily on operations.
The downgrade reflects the profound impact of the conflict involving Iran, Israel and the United States, which has repeatedly disrupted air corridors across the region and forced airlines to make costly operational adjustments.
“The Gulf carriers face operational uncertainty following a near-complete shutdown of airspace at the outbreak of the war,” said Willie Walsh, director general of Iata.
“These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”
While the warning highlights the near-term pressures facing the industry, the region’s aviation leaders are focusing on the sector’s longer-term strengths.
The Gulf’s aviation ecosystem, led by Emirates, Etihad Airways, Qatar Airways, flydubai, Air Arabia, Saudia and the emerging Riyadh Air, has transformed the region into one of the world’s most important aviation crossroads. Together, these carriers connect hundreds of destinations across Asia, Europe, Africa and the Americas through strategically located hubs in Dubai, Abu Dhabi, Doha, Riyadh, Jeddah and Sharjah.
That geographic advantage remains unchanged despite the conflict.
Manoj John, founder and CEO of AeroConnections UAE, said the current disruption should be viewed as a stress test rather than a structural threat to the region’s aviation model.
“The Gulf aviation industry was built to manage complexity. What we are seeing today is a stress test of a system that has consistently adapted to geopolitical, economic and operational disruptions over the last three decades,” John said.
“While profitability will inevitably come under pressure, the region’s carriers possess significant advantages, including younger fleets, stronger balance sheets, advanced digital capabilities and government support. Most importantly, they continue to enjoy strong passenger demand and a strategic location that competitors simply cannot replicate.”
The biggest challenge confronting airlines today is fuel.
Iata estimates global fuel costs will surge nearly 40 per cent this year to $350 billion from $252 billion in 2025. Brent crude is forecast to average $95 per barrel, up from $69 last year, while jet fuel prices are expected to jump almost 70 per cent to $152 per barrel.
The jet fuel crack spread — the premium airlines pay above crude oil prices — is expected to reach a record $57 per barrel, highlighting the severity of cost pressures facing carriers worldwide.
Yet demand remains surprisingly resilient.
Global airline revenues are projected to increase 9.4 per cent to $1.165 trillion this year, while passenger traffic is expected to exceed five billion travellers for the first time in aviation history. Average load factors are forecast to reach a record 84 per cent, indicating that consumers continue to prioritise travel despite higher fares and economic uncertainty.
This demand resilience is particularly important for the GCC, where aviation forms a cornerstone of broader economic diversification strategies.
The UAE continues to strengthen its position as a global aviation and tourism hub. Dubai International Airport retained its ranking as the world’s busiest international airport in 2025, while work continues on the expansion of Dubai World Central-Al Maktoum International Airport, which is expected to become the world’s largest aviation hub over the coming decade.
Abu Dhabi is also rapidly expanding its aviation footprint. The opening of the new terminal at Zayed International Airport and the ongoing growth of Etihad Airways are reinforcing the emirate’s ambitions to become a major tourism, logistics and business travel destination.
Saudi Arabia, meanwhile, is investing heavily in aviation infrastructure under Vision 2030, with plans to increase passenger traffic to 330 million annually by the end of the decade through new airports, airline expansion and tourism projects.
Industry analysts note that Gulf carriers have historically demonstrated greater adaptability than many traditional airlines during periods of disruption. Their relatively young fleets, strong hub infrastructure, diversified route networks and government-backed growth strategies provide important competitive advantages during periods of volatility.
Moreover, the region’s aviation growth story is increasingly being driven by more than transit traffic alone. Tourism, logistics, e-commerce, business travel and large-scale events are creating new sources of demand across the GCC.
The long-term fundamentals therefore remain compelling.
Even as the current conflict disrupts operations and raises costs, governments across the Gulf continue to invest billions of dollars in airport infrastructure, aircraft orders, digital transformation and sustainable aviation initiatives. Those investments reflect confidence that the region will remain a critical gateway linking the world’s fastest-growing economies.
The immediate outlook may be challenging. Rising fuel costs, longer routings and operational uncertainty are likely to weigh on airline earnings throughout the year. Yet for many observers, the bigger story is not the temporary deterioration in profitability but the remarkable resilience of an industry that has repeatedly emerged stronger from crises.
If history is any guide, the UAE and its Gulf neighbours are unlikely to surrender their status as global aviation leaders. Instead, the current turbulence may ultimately reinforce the value of the region’s strategic location, world-class infrastructure and ability to keep global commerce and travel moving even during periods of extraordinary disruption.
