Limited impact expected from Middle East aviation disruption

March 06, 2026 (MLN): Aviation disruption across the Middle East following attacks by Israel and the United States on Iran on February 28, and Iran’s subsequent strikes on countries in the region, will play a key role in determining the impact on sectors including airlines, airports, lodging, insurance and aircraft lessors, according to Fitch Ratings.

The ratings agency said its baseline expectation that the Middle East conflict will last less than a month should limit the financial implications for Fitch-rated issuers in sectors affected by the aviation disruption, though it cautioned that the outlook remains highly uncertain.

Since February 28, aviation across the Middle East has been severely disrupted due to widespread airspace closures and restrictions, forcing airlines to reroute, divert or cancel services.

Major hub airports, including Dubai International Airport, Abu Dhabi International Airport, and Hamad International Airport, have experienced significant schedule disruptions and congestion.

More than 15,000 flights were reportedly cancelled across seven major regional airports between February 28 and March 5, affecting over 1.5 million passengers, while some flights were diverted to airports in Europe.

Airlines operating disrupted routes face immediate revenue losses from cancelled flights, with the greatest exposure among carriers whose hubs are located in directly affected countries.

Flight operations over the United Arab Emirates and Qatar appear particularly constrained, given the scale of the region’s hub carrier operations.

Other airlines are mainly affected by suspended services to impacted destinations and by the need to reroute flights around restricted airspace, increasing operational complexity.

The disruption is also pushing up operating costs due to longer flight paths, additional technical stops, overtime for crew and staff, and higher accommodation and handling expenses.

While passenger compensation is expected to remain limited because the conflict is outside airlines’ control, carriers may still incur costs for meals, accommodation, refunds or vouchers for cancelled services.

However, higher fares on affected and adjacent routes could partially offset the financial impact of the disruption.

Airlines are also likely to face rising fuel costs as oil prices increase. According to Fitch, most airlines in Europe, the Middle East and Africa maintain relatively high fuel-hedging coverage, typically ranging from around 50% to more than 80% for the next three months.

The effect on Fitch-rated European airports is expected to be mixed. Revenue losses from declining point-to-point travel from the Far East and reduced retail spending per passenger could be partly offset by increased ancillary revenues such as parking fees and, in some cases, regulatory protections against traffic volatility.

Fitch said lodging companies with exposure to the Middle East are largely global operators with diversified geographic footprints, allowing them to absorb the impact of travel disruptions. The effect may also be mitigated by stronger revenue per available room in the Mediterranean and Asia-Pacific regions.

In the insurance sector, aviation policies may allow insurers to cancel coverage, while war-risk cover generally applies only to aircraft damage.

Business interruption policies usually exclude war risks, which could put pressure on portfolios heavily exposed to the Gulf region.

Meanwhile, the impact on aircraft lessors rated by Fitch is expected to remain limited due to their globally diversified fleets, long-term lease contracts and strong liquidity positions.

However, Fitch warned that a more prolonged disruption to aviation operations could have more significant consequences for affected sectors and issuers, particularly smaller and less diversified companies.

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