The Iran War Is Reshaping Global Aviation

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Given its geographical advantage, Turkish Airlines also gained market share in the month after the war began, while Qatar Airways lost the most, according to the data analyzed by Bloomberg.

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Lufthansa saw a pickup in short-term demand, but wants to make these new route switches more permanent. Chief Financial Officer Till Streichert said there’s “absolutely” the potential to move capacity to Asia on a more lasting basis.

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Such moves aren’t always straightforward, particularly if there’s an aircraft mismatch. A single-aisle jet serving a European-Gulf route won’t necessarily be suitable for a longer-haul trip to Asia, and new, fuel-efficient widebody aircraft have years-long waiting lists. Plus, opening new routes takes months of preparation involving landing slots, schedules and staffing.

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Meanwhile, worries about a jet fuel shortage have prompted Lufthansa management to ready crisis plans that could involve grounding planes.

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Lufthansa shares are down 17% since the war began. British Airways parent IAG SA has fallen 13% in the same period, while Air France-KLM has dropped 27%. Morgan Stanley and UBS recently cut share-price targets on a number of European airlines, citing fuel costs.

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Price War

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While the end of the war remains unclear, what’s certain is that the Mideast carriers will return to the market hungry to regain ground, and pricing could come into play.

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“I would expect the Gulf carriers to offer highly attractive fares to rebuild traffic via their hubs, so maybe the European carriers will only have a short window of opportunity to exploit high demand and high fares,” said Richard Evans, senior consultant at analytics firm Cirium.

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The Middle East hub model saw Emirates and Etihad enjoy massive growth in recent decades. Emirates carried 55.6 million passengers in 2025, more than quadruple the number ferried just 20 years earlier.

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That helped to make Dubai the world’s busiest international airport, but rivals say the airlines’ expansion was for years sustained by unfair subsidies.

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“It drives me crazy when people say, ‘These Gulf carriers are so amazing, they’ve got brand-new airplanes, they’ve got fantastic new airports’,” Air France-KLM CEO Ben Smith said in an interview last month. “But when you’re in an unlevel playing field, you can produce that.”

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Asian airlines have boosted their long-haul trips too, with Singapore Airlines adding services to London and Melbourne, while Hong Kong’s Cathay Pacific Airways ramped up flights to Paris, Zurich and London. Air India said it’s introduced more services and Australia’s Qantas Airways is also trying to add capacity on European routes.

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Flying between Asia and Europe was already tricky because many Western airlines were forced to dodge Russian airspace following its invasion of Ukraine in 2022.

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The Iran conflict has exacerbated that. With Iranian and Iraqi airspaces closed, aircraft are being routed through narrow strips over Georgia, Azerbaijan and central Asia.

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“The issue for European carriers to Asia is airspace availability, and competing with Asian airlines that are more competitive and can fly over Russia,” said Conroy Gaynor, an analyst at Bloomberg Intelligence. “We think more capacity will end up on the Atlantic but have concerns on whether there is enough demand to absorb a significant increase.”

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(1) Methodology note: Bloomberg analyzed 131,074 flight records between Feb. 1 and March 27, 2026 from Flightradar24, comparing trends before and after the US and Israeli attack on Iran that started Feb. 28. The data is limited to international widebody passenger flights among 21 airlines.Gulf Carriers: Emirates, Qatar Airways, Etihad AirwaysUS: United Airlines, Delta Air Lines, American AirlinesEurope: Air France-KLM, British Airways, Lufthansa, Turkish Airlines, Iberia, Swiss, TAP Air Portugal, ITA Airways, Brussels Airlines, SAS, Austrian Airlines, Martinair, Oceania, QantasAsia: Air India, IndiGo

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