Middle East war dims airline growth outlook

By Ashley Erika O. Jose, Reporter

AIRSPACE closures and flight rerouting triggered by the war in the Middle East are increasing costs and operational risks for airlines, casting uncertainty over the aviation industry’s growth outlook, analysts said.

Airlines may need to recalibrate their plans by rerouting some services, which could affect passenger capacity for the year, Nigel Paul C. Villarete, senior adviser on public-private partnerships at technical advisory group Libra Konsult, said in a Viber message.

“Most, if not all, would certainly hope this is a passing incident and not a long term one because aviation planning and preparation is a long-term issue, and would involve sizable expenses of course, in terms of aircraft and personnel changes,” he added.

In a media release on Friday, Dubai-based airline Emirates said it is working to restore full operations of its services within the coming days following the partial reopening of regional airspace.

The airline said it expects to return fully to operations shortly, without specifying a timeline, subject to airspace availability and the fulfillment of operational requirements.

On March 7, Emirates operated 106 return daily flights to 83 destinations, representing nearly 60% of its route network. At present, the airline offers up to 22,700 weekly seats between Manila and Dubai across 28 weekly flights.

According to the Civil Aviation Authority of the Philippines (CAAP), about 110 flights to and from the Philippines were canceled or diverted due to the ongoing conflict in the Middle East.

“[It] could affect the aviation industry mainly through higher fuel costs and operational disruptions… When geopolitical conflict pushes oil prices higher, airlines often face rising operating costs, which may eventually translate into higher airfares if the increase persists,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

Jet fuel accounts for a significant portion of airlines’ operating costs. The Civil Aeronautics Board (CAB) has maintained the fuel surcharge at Level 4 for March, keeping fuel charges steady for three straight months this year and for the eighth consecutive month since August last year.

“The conflict has already triggered airspace closures and flight rerouting in parts of the Middle East, forcing airlines to take longer routes and incur additional fuel and operational costs,” Mr. Rivera said.

Airlines may not immediately raise fares if they have fuel hedging or if strong demand helps offset costs, but prolonged conflict could prompt carriers to recalibrate growth plans, he said. This may include delaying route expansions or adjusting capacity to manage uncertainty and higher costs.

At Level 4, the fuel surcharge ranges from P117 to P342 for domestic flights and from P385.70 to P2,867.82 for international flights originating from the Philippines.

Listed airlines may also face revenue pressures if disruptions persist, analysts said.

“Of course, higher plane fares due to higher oil prices and disrupted flights in the Middle East [will result] in lower revenues for carriers,” said Cristina S. Ulang, head of research at First Metro Investment Corp.

“Negative given the increase in oil prices and potential disruption of their flights to the Middle East,” COL Financial Group’s First Vice-President, Corporate Strategy and Chief Investor Relations Officer April Lynn Lee-Tan said when asked about the impact of the conflict on airline profitability.

“A prolonged war in the Middle East would mean higher fuel costs, expensive rerouting, and potentially more cautious travel sentiment, all of which could adversely impact the financial performance of listed airline stocks,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

For 2026, the International Air Transport Association (IATA) initially expected the airline industry in Asia to sustain growth, supported by strong passenger and cargo demand.

However, the group has also flagged supply chain disruptions, climate change, cyber threats, and artificial intelligence as additional challenges for the sector.