Airlines operating in the Middle East are projected to move into collective losses in 2026 as escalating regional tensions, restricted airspace access and sharply higher fuel costs place significant strain on the sector, according to the latest outlook from the International Air Transport Association (IATA).
The industry body said that while carriers in other regions are also expected to see weaker profitability, the Middle East is likely to be the only region to post an overall net loss.
Across the global aviation industry, profits are expected to fall substantially. IATA forecasts net earnings declining from $45 billion in 2025 to $23 billion in 2026, with profit margins narrowing from 4.2 per cent to 2.0 per cent.
Willie Walsh, Director General of IATA, said the outlook has deteriorated due to conflict-related disruption in the Middle East and a significant rise in fuel costs. He noted that jet fuel prices have increased by nearly 70 per cent globally, forcing airlines to absorb higher operating expenses despite ongoing efficiency improvements and fare adjustments.
Walsh added that while all regions remain profitable, performance has weakened sharply across the board, except for the Middle East. He said Gulf carriers are operating under considerable uncertainty following major airspace disruptions linked to the onset of conflict, though they continue to maintain global connectivity despite financial pressure.
IATA estimates that global fuel expenditure will rise from $252 billion in 2025 to $350 billion in 2026, accounting for more than 31 per cent of total airline operating costs, compared with 25.4 per cent the previous year.
The projection is based on an average Brent crude price of $95 per barrel in 2026, up from $69 in 2025. Jet fuel is expected to average $152 per barrel, significantly higher than the previous year, while the spread between crude and jet fuel prices is expected to remain elevated.
Although airlines are hedging roughly one-third of their fuel needs, IATA warned that carriers remain exposed to sustained price increases and high refining margins.
Overall fuel consumption is forecast to remain steady at about 104 billion gallons in 2026, meaning that higher fuel prices are the primary driver of rising industry costs.
Walsh also highlighted that the sector’s financial resilience is under pressure, with average net profit per passenger expected to fall to $4.50, nearly half of the level recorded in 2025.
The Middle East is expected to be the most affected region, as geopolitical instability leads to capacity reductions, flight disruptions, and higher operating costs. Reduced transit traffic is also weighing on load factors, further increasing unit costs for airlines.
Despite these challenges, IATA said Gulf carriers continue to work to sustain global connectivity, even as financial headwinds intensify across the region.
Source: ZAWYA