- IATA forecasts passenger demand in the Middle East will decline by 11.4 percent in 2026, while airline capacity is expected to contract by 4.4 percent. As a result, regional carriers are projected to record a net margin of minus 6.1 percent, compared with a positive 9.4 percent in 2025.
- Despite efforts by major carriers to maintain connectivity across international markets, flight cancellations, route diversions, reduced transit traffic, and higher operating expenses are expected to weigh heavily on profitability.
- The industry also continues to grapple with aircraft delivery delays and supply chain constraints. IATA reported that aircraft order backlogs now exceed 18,000 jets, while the average age of the global fleet has climbed to a record 15.2 years.
Middle Eastern airlines are projected to incur collective losses of $4.3 billion in 2026, making the region the only global aviation market expected to end the year in negative territory, according to the latest financial outlook released by the International Air Transport Association (IATA).
The report, unveiled during IATA’s Annual General Meeting in Rio de Janeiro, attributes the downturn primarily to the operational and economic fallout from ongoing regional conflicts, rising fuel costs, and widespread airspace disruptions affecting major Gulf aviation hubs.
IATA forecasts passenger demand in the Middle East will decline by 11.4 percent in 2026, while airline capacity is expected to contract by 4.4 percent. As a result, regional carriers are projected to record a net margin of minus 6.1 percent, compared with a positive 9.4 percent in 2025.
According to IATA Director General Willie Walsh, Gulf airlines continue to face significant operational challenges following extensive airspace restrictions and flight disruptions triggered by regional tensions.
Despite efforts by major carriers to maintain connectivity across international markets, flight cancellations, route diversions, reduced transit traffic, and higher operating expenses are expected to weigh heavily on profitability. Gulf airlines, which rely extensively on connecting passengers traveling between Asia, Europe, and Africa, have been particularly affected by the decline in transfer traffic.
Globally, the airline industry is also expected to experience a sharp slowdown. IATA forecasts worldwide airline profits will fall from $45 billion in 2025 to $23 billion in 2026, while net profit margins are expected to narrow from 4.2 percent to 2.0 percent, the Gulf News reports.
A key factor behind the weaker outlook is the surge in jet fuel prices. IATA expects average jet fuel prices to reach $152 per barrel in 2026, nearly 70 percent higher than the 2025 average of $90 per barrel. Consequently, global airline fuel expenses are projected to rise from $252 billion to $350 billion, accounting for more than 31 percent of total operating costs.
Walsh noted that geopolitical instability, supply chain disruptions, and rising energy prices have created unprecedented pressure on airlines, adding an estimated $100 billion to the industry’s collective fuel bill.
Despite these challenges, demand for air travel remains resilient. Global passenger numbers are expected to reach 5.1 billion in 2026, an increase of 2.4 percent compared to the previous year. Industry revenues are projected to rise 9.4 percent to $1.165 trillion, supported by higher ticket prices, sustained travel demand, and growing ancillary revenues.
Passenger ticket revenues alone are forecast to reach $839 billion, while global load factors are expected to hit a record 84 percent.
The industry also continues to grapple with aircraft delivery delays and supply chain constraints. IATA reported that aircraft order backlogs now exceed 18,000 jets, while the average age of the global fleet has climbed to a record 15.2 years.
Airlines are increasingly being forced to operate older aircraft for longer periods, leading to higher maintenance costs, increased leasing expenses, and reduced fuel efficiency.
IATA estimates that supply chain failures cost airlines at least $11 billion in 2025, while delayed engine deliveries and maintenance issues continue to hamper fleet renewal efforts across the industry.
