IATA’s latest numbers make uncomfortable reading on a Monday morning. Airline profits this year are still positive, but they’ve been cut almost in half by a combination of Middle East war and fuel prices that have shot up by nearly 70% since last year.
In June, IATA’s 'Global Outlook for Air Transport' and accompanying press release laid out the picture. Jet fuel prices, driven above USD 200 per barrel at the peak of the Iran conflict and now expected to average around USD 152 per barrel in 2026, are forecast to push industry fuel costs from roughly USD 252 billion in 2025 to about USD 350 billion this year. A jump of close to USD 100 billion. Fuel and labour have always been the two biggest line items on airline P&Ls. When one of them leaps like that, the effect on profits is brutal. IATA now expects net global airline profit to fall from around USD 45 billion in 2025 to roughly USD 23 billion in 2026, with net margins sliding from about 4.2% to 2.0% and profit per passenger dropping to roughly USD 4.50.
The Middle East war is a big part of the story. Missile and drone strikes that began on 28 February and escalated through March didn’t just disrupt local airports; they squeezed jet fuel supply chains around the Gulf and pushed crude above USD 100 per barrel, with jet fuel crack spreads widening sharply. Airlines flying between Asia and Europe, or between Africa and Asia, found themselves rerouting around closed airspace, adding miles and minutes to flights. IATA’s Chart of the Week series notes that 10% of all global international RPKs pass through Middle East hubs; when those hubs are stressed, detours ripple across many long‑haul corridors.
To Indian and Asian airlines, the cascade is easy to see. When IndiGo and Air India Express partially suspended Gulf services and then restored them with longer routings, each flight burned more ATF, carried higher war‑risk insurance premiums and spent more time in the air, which meant fewer rotations per day for the same aircraft. Even when routes reopen, detours and fuel hedging don’t vanish overnight. IATA has stressed that the sudden change is more challenging than high fuel prices. If fuel stays expensive but stable, airlines can adjust fares and operations gradually; when it spikes quickly, costs outrun the ability to raise revenue, and margins are squeezed fast.
That’s what July 2026 looks like from the balance sheet. Demand is still there. Ticket bookings for June–September are above last year’s levels. But the cost to serve that demand has increased. Airlines are pushing fares higher, trimming marginal routes, and watching low‑volume city pairs most closely, because IATA’s data shows that routes offering fewer than 20,000 seats are disproportionately likely to be cut when costs rise.
Tailwind Times’ 'Industry Monday' lens, the airlines worldover are feeling that pinch and whether in the other half they get to recover any of the lost costs is another story, but IATA rules that out.