Global airline chiefs to confront Iran war fuel shock 

Global airline bosses gathering in Rio de Janeiro this weekend will be searching for answers to the industry’s biggest crisis since the pandemic, with the Iran war pushing up jet fuel costs, forcing flight detours and testing carriers’ ability to raise fares in a tightening market.

The June 6–8 annual meeting of the International Air Transport Association (IATA) is the industry’s biggest summit, bringing together hundreds of top executives from airlines, manufacturers, suppliers and financiers. The sector is effectively under one roof, with high stakes and tough questions on the table.

IATA represents more than 370 airlines accounting for some 85% of global air traffic, giving it a central role in a sector where profits were earlier expected to reach a record $41 billion this year before the Iran war began to bite.

Industry executives and analysts now expect a downgrade to that forecast at the meeting, where discussions are likely to focus on surging fuel prices, supply fears, disruptions to Middle Eastern airspace, deepening aircraft delivery delays, and whether airlines are falling further behind on climate targets. The industry finds itself at a crossroads, with margins tightening and uncertainty hanging in the air.

Airlines worldwide have already begun reacting, raising fares, trimming unprofitable routes and conserving cash until conditions stabilise. However, this has also raised fresh questions over whether carriers can meet IATA’s goal of net-zero emissions by 2050, given the high cost and limited supply of sustainable aviation fuel.

Moody’s Ratings last week cut its global airline sector outlook to negative from stable, saying fuel costs linked to the Iran war and disruption around the Strait of Hormuz would “materially reduce” operating profit this year. It added that profits could fall by more than 35% in 2026 before recovering the following year.

IATA data showed global passenger traffic contracted in April for the first time since the post-pandemic recovery, led by a sharp fall in demand at Middle Eastern carriers. The industry, once flying high on recovery momentum, is now navigating turbulence.

Air India’s outgoing chief executive Campbell Wilson said higher fuel prices and airspace closures were making some routes increasingly difficult to justify.

“When you take on all those competitive dynamics, the added cost of this extra flying, the added cost to fuel, it just makes some routes uneconomic,” he said.