Over the past thirty years, global aviation has grown accustomed to operating in an environment defined by the near-continuous availability of air corridors, relatively cheap fuel, and a predictable geopolitical landscape. Airlines built increasingly complex yet highly efficient route networks, minimized reserves, maximized fleet utilization, and concentrated global transit around a small number of major hubs — particularly in the Gulf region. This model enabled relatively low ticket prices and created an unprecedented level of global connectivity. Yet its stability depended heavily on one unspoken assumption: that the international system would remain sufficiently stable for risks to be calculated, distributed, and insured in advance.
It is precisely this assumption that is now beginning to unravel. Flight restrictions over Middle East, the threat of missile strikes and drone attacks, the rerouting of traffic between Europe and Asia, rising aviation fuel prices, and growing instability in the insurance market are exposing just how fragile the architecture of modern global aviation has become. The problem, however, is not simply higher oil prices. Aviation is particularly vulnerable to the jet fuel market, where pricing depends not only on crude oil itself, but also on refining capacity, supply logistics, tanker routes, and the availability of export infrastructure in the Persian Gulf region. Even limited disruptions around the Strait of Hormuz can trigger disproportionately sharp increases in aviation kerosene prices.

The Fragility of the Global Aviation System

Modern civil aviation ceased to be merely a transportation industry. Over the past several decades, it has evolved into one of the core infrastructures of globalization — a system enabling the connectivity of the global economy in near real time. Aviation linked together international tourism, global supply chains, financial centers, transnational business, labor migration, and the world’s largest transit hubs. The accessibility and predictability of air travel allowed the modern world to treat global mobility as something natural and almost permanently guaranteed.
Yet the conflict surrounding Iran is exposing just how fragile the conditions behind this model really were. For decades, the global aviation system developed under the assumption of relative geopolitical stability, reliable access to key air corridors, and the ability to calculate and distribute most risks in advance. These assumptions enabled the industry to become one of the most hyper-optimized systems in the modern economy.
Airlines minimized reserves, reduced aircraft turnaround times, maximized fleet utilization, and built increasingly dense route networks heavily dependent on major transit hubs. Hub systems in Dubai, Doha, and Abu Dhabi became not merely successful regional projects, but fundamental components of global connectivity between Europe, Asia, and Africa. This architecture delivered extraordinary efficiency, yet at the same time made the system significantly less resilient to major geopolitical shocks.
As long as the world remained relatively predictable, such hyper-optimization appeared to be the ideal model. However, an era of growing geopolitical turbulence is gradually transforming that efficiency from an advantage into a source of vulnerability. Every rerouting increases flight times and fuel consumption; disruption in one region breaks complex connection chains; and rising volatility makes both operating costs and network planning increasingly difficult to predict. A system designed for maximum efficiency is proving poorly suited to a world of permanent uncertainty.
Equally important is the fact that the conflict surrounding Iran undermines the perception of airspace as neutral infrastructure. Most passengers view international routes simply as geography — lines connecting points on a map. In reality, global aviation has always depended on a far more complex structure: diplomatic agreements, military balances, regional reputation, and trust in the stability of entire parts of the world. Air corridors exist not only because of navigation technology, but because of political arrangements.
This is precisely why restrictions over Iran and neighboring countries are affecting far more than the Middle East itself. The conflict highlights another fundamental vulnerability of modern aviation — the excessive concentration of global transit around a small number of super-hubs. When disruption affects one of the key regions within the global aviation network, the consequences quickly spread across intercontinental routes. This is no longer a localized problem for individual airlines, but a systemic risk to the entire architecture of global mobility.
As a result, global aviation is increasingly confronting a new reality: the era of ultra-cheap, densely interconnected, and highly predictable air travel may prove to have been a historical exception rather than the norm.

Jet Fuel Shock: The Energy Crisis of Aviation

If the first victim of the geopolitical crisis for aviation is routing, then the second — and perhaps the most destructive — is the energy economics of flight itself. The common assumption that airlines are simply suffering from higher oil prices fails to capture the real structure of the industry’s vulnerabilities. Civil aviation depends not on crude oil alone, but on the jet fuel market — a far more complex system shaped by refining capacity, tanker logistics, crack spreads, export infrastructure, and the stability of critical maritime routes.
This is precisely why the conflict surrounding Iran has become so damaging for global aviation. The Strait of Hormuz is not merely one of the world’s most important oil chokepoints; it is effectively a systemic point of failure within the global energy infrastructure. A significant share of global oil and refined petroleum products essential for aviation fuel production passes through the region. Even limited disruptions in the Persian Gulf can trigger disproportionately sharp increases specifically in jet fuel prices. Unlike many other transport sectors, aviation has virtually no rapid alternative to aviation kerosene and remains extremely sensitive to any spike in its cost.
According to Reuters, following the escalation of the conflict, European airlines faced the most severe jet fuel crisis since the COVID-19 pandemic, with jet fuel prices in some markets rising by nearly 84% since the beginning of the conflict. At the same time, concerns over fuel shortages ahead of the summer season intensified, particularly in Europe and Asia, regions far more dependent on Middle Eastern refining and supply chains than is commonly assumed. IATA Director General Willie Walsh warned that, in the event of a prolonged crisis, shortages of jet fuel could first hit Asia before spreading to Europe and other regions.
For airlines, the implications are becoming fundamental. In relatively stable periods, jet fuel typically accounted for around 25–30% of flight operating costs. According to Aviation Week and Reuters, however, that share is now approaching 45% on certain routes. Fuel is no longer merely one of the largest expense categories — it is becoming the dominant factor shaping the economics of flight itself. Under such conditions, airlines stop optimizing for profit and begin fighting for margin survival.
This is already reshaping airline strategy. Air France-KLM has warned of a €2.4 billion increase in fuel expenses and reduced its 2026 capacity growth outlook. Lufthansa is considering cuts to less profitable routes, while British Airways owner IAG has warned about the risk of global jet fuel supply constraints should the conflict continue. At the same time, the crisis is drawing attention to a topic usually overlooked outside financial circles: fuel hedging.
In normal periods, fuel hedging is viewed as a routine financial instrument. Airlines lock in part of their future fuel prices in order to reduce volatility. During a major energy shock, however, hedging becomes a strategic competitive weapon. Airlines that secured lower prices before the crisis can maintain lower fares and preserve stability for much longer. This is why Ryanair — historically aggressive in fuel hedging — currently appears significantly more protected than many competitors, while Wizz Air is attempting to offset higher fuel costs through a younger and more fuel-efficient fleet.
At the same time, the crisis has not affected all airlines equally. Some major carriers have continued to report strong financial results despite rising fuel costs and geopolitical turbulence. Lufthansa posted improved earnings and maintained a positive outlook on premium demand, while Emirates reported record annual profits supported by resilient long-haul traffic and the strength of its global hub model. This highlights a growing divide within the industry between airlines with financial scale, strong networks, and pricing power, and weaker carriers operating on thinner margins.
All of this raises a much broader question: is the era of ultra-cheap air travel coming to an end? For decades, global aviation developed under conditions of relatively cheap fuel, cheap capital, and highly predictable global routes. These factors enabled the rise of the low-cost model, ultra-dense hub systems, and unprecedented international mobility. Yet the energy crisis triggered by the conflict surrounding Iran is exposing just how fragile these assumptions were. A world in which air travel was perceived as a constantly cheaper and ever more accessible service may gradually be disappearing.

War Risks: The Crisis of Aviation Insurability

Modern civil aviation exists not only because of technology, airports, and aircraft. Its foundation is a far less visible but critically important system: the ability of the global market to evaluate, distribute, and insure risk. For decades, the aviation industry developed on the assumption that almost any risk could be transformed into calculable exposure — its probability estimated, losses distributed among insurers and reinsurers, and the cost of risk integrated into the economics of flight itself. This is why the problem today is not simply that “insurance has become more expensive.” The conflict surrounding Iran is beginning to challenge the very model of insurability on which modern aviation depends.
Most passengers rarely realize that aviation insurance is divided into two fundamentally different layers. The first — traditional all risks insurance — covers ordinary operational risks: technical failures, crew error, weather-related incidents, and other standard disruptions. The second — war risks insurance — applies to a much more complex category of threats: war, terrorism, hijackings, state actions, missile strikes, and the destruction of aircraft in conflict zones. It is this segment that is now becoming one of the most unstable parts of the entire global aviation system.
In many ways, the crisis in war risks insurance did not begin with Iran, but much earlier — after the downing of MH17 and especially following the outbreak of the conflict in Ukraine. The market was then confronted with unprecedented levels of exposure: massive lessor losses, the retaining of Western-owned aircraft in Russia, multi-billion-dollar legal disputes, and severe pressure on the global reinsurance market. For many insurers and aircraft lessors, this was the first clear signal that geopolitical risk in aviation could no longer be treated as a rare exception. The major media outlets described the Ukraine-related insurance disputes as one of the largest stress tests for the aviation insurance industry in decades.
The conflict surrounding Iran significantly expands this problem. While the Ukraine case was primarily associated with territorial war and sanctions, the current crisis introduces an additional set of risks: drone warfare, GPS spoofing, missile threats, sudden airspace closures, and elements of hybrid warfare. What makes these developments especially dangerous for insurers is that such risks are becoming increasingly difficult to model. Aviation insurers can tolerate high but statistically understandable risks. What financial markets struggle with most are situations in which neither the probability of an event nor the scale of potential losses can be reliably estimated.
This is why the industry is increasingly discussing the possibility of a crisis within the war risks insurance model itself. Insurance premiums on certain routes are already rising, insurers are introducing carve-outs for specific regions, and some war risks policies now include seven-day cancellation clauses. At the same time, the market is moving toward shrinking coverage and the emergence of informal exclusion zones — regions where insurance is becoming either prohibitively expensive or effectively unavailable.
This creates a particularly dangerous scenario for global aviation: the emergence of “economically uninsurable” air corridors. Formally, such routes may remain open, airports may continue operating, and airspace may not be officially closed. Yet the financial cost of risk may become so high that operating these routes no longer makes economic sense. In this scenario, the market itself begins restricting mobility even in the absence of direct political bans.
Against this backdrop, another issue long overlooked is gradually returning to prominence — the role of the state as guarantor of last resort. After 9/11, many Western governments were already forced to intervene temporarily in the war risks insurance market by providing state guarantees to airlines. If geopolitical instability continues to intensify, governments may once again become backstop providers and quasi-insurers for the aviation industry. This would represent more than a temporary emergency measure; it could mark a deeper structural shift away from an era of globally distributed private risk toward a world in which strategic industries increasingly require direct state support.