Hard landing: is the airline market facing a redevelopment in 2026
This year may be a turning point for global air transportation: a combination of energy instability, jet fuel shortages and geopolitical tensions creates the prerequisites for a large-scale redistribution of the market. The increase in fuel charges has already affected the cost of tours. The availability of long-distance travel for the mass tourist is likely to decrease. Fares on the Europe–Asia routes may increase by 12-18%, and on the Middle East–Africa routes by 15-22%. Izvestia estimated the real scale of the brewing turbulence.
Is the air transportation market waiting for a large-scale redevelopment
The global air transportation market is on the verge of major changes, but this is not about the collapse of the industry, but about the redistribution of forces between regions. According to the International Air Transport Association (IATA), the total profit of airlines in 2026 could reach about $41 billion. This is a record figure, but the profitability of the industry remains modest — about 3.9%. In terms of one passenger, one airline earns less than $8 in net profit. This is a very thin layer that easily disappears with any increase in costs.
The key uncertainty factor is the price of jet fuel. Fuel accounts for almost 26% of all operating expenses of carriers. A simple calculation shows that if the oil price rises by 20%, the airline's operating costs will increase by more than 5%. At the current margin, this means an automatic loss if ticket prices are not increased. That is why this year will be a test of sustainability for many participants in the aviation market.
Regional differences reinforce the picture of the coming redistribution. The airlines of the Middle East demonstrate the best performance: their profitability, according to IATA, exceeds 9%, and the profit per passenger is almost four times higher than the global average. European carriers operate with a margin of about 5% and are highly dependent on their ability to insure fuel risks. North America is showing moderate results with a margin of about 3.4%, while the Asian region, despite the rapid growth in passenger traffic, remains the least profitable, with margins of less than 2.3% due to high competition and low fares. It can be predicted that the net profit per passenger for airlines in the Middle East will be $28.6, in Europe — $10.9, in North America — $9.8, and in the Asia-Pacific region — $3.2. This dynamic confirms the leadership of Middle Eastern carriers and the relatively weak positions of Asian companies compared to European and North American ones.
The press service of the Association of Tour Operators of Russia (ATOR) explains that the current situation most affects routes between Asia, Europe and the Middle East, as well as markets dependent on fuel imports (Pakistan, Myanmar, Vietnam, the Philippines, etc.). At the same time, the Gulf carriers are Emirates, Etihad Airways, flydubai and Air Arabia — so far they feel more stable due to access to their own "gas stations".
It is clear that most of the industry's profits will most likely be concentrated in three regions — the Middle East, Europe and North America. But only the first one has the structural advantages to overcome fuel shocks. The rest will have to adapt or lose ground.
At the same time, the Russian Association of Air Transport Operators (AEVT) is confident that, based on the current state of air transportation, a large-scale redistribution of the global market is still not visible.
— The current situation with aviation kerosene may to some extent affect the air transportation markets only in the short term. In the framework of medium- and long-term forecasts, European and Middle Eastern airlines will mostly maintain their positions. The global route network and the availability of long—distance travel will only develop, not to the detriment of traditional tourist destinations," AEVT told Izvestia.
Energy shock and jet fuel shortage
This year's fuel crisis scenario is no longer just a theory. Geopolitical tensions in the Strait of Hormuz, through which about 20% of global oil products exports pass, are already putting pressure on prices. The International Energy Agency estimates that Europe has no more than six weeks of strategic jet fuel reserves left. If supplies do not stabilize, airlines may face forced flight cancellations.
Europe's vulnerability has structural causes. Over the past 15 years, 28 oil refineries have been closed or repurposed in the region, which is more than a quarter of the total number. This has increased dependence on imports: today, Europe buys about 30% of the necessary jet fuel abroad, with three quarters of these supplies coming from the Middle East. At the same time, many European carriers have insured prices for only 30-50% of the fuel volume, while American players hedge up to 80% of their needs.
But Oleg Panteleev, executive director of the Aviport agency, is confident that even with supply disruptions, air traffic paralysis will not occur: the European authorities are already developing emergency plans to redistribute resources, directing fuel primarily to long-haul flights, where replacing air transportation by land transport is impossible, and encouraging the use of railways on short routes.
— Fuel—producing countries, including Russia, are in a more stable position now. At the same time, fuel prices at foreign airports remain a key factor in rising costs for Russian carriers, which affects the cost of international flights, the expert notes.
Paradoxically, the Middle East, being at the epicenter of geopolitical risks, demonstrates high operational stability. This is due to the presence of our own refineries, government support, and a premium tariff policy that allows us to pass on rising costs to passengers. The United States and China are strengthening their positions due to other factors. The US domestic market is estimated at almost $268 billion, and three quarters of passenger traffic is accounted for by domestic flights, which reduces dependence on international volatility. China, which is restoring domestic traffic with a growth rate of 7.3% per year, is supported by government subsidies and priority allocation of slots at airports.
Calculations show that with a 30% increase in fuel prices, a low-margin European airline could lose more than $1.2 billion in profit. A Chinese carrier with government support and a low debt burden, with a comparable scale of operations, will lose three times less. And this creates a long-term competitive advantage.
Implications for travel accessibility
Changes in the economics of flights will inevitably affect the geography of flights. According to ATOR's press service, the cost of fuel already accounts for 20-30% of airline costs, and in Asia, the price of jet fuel has almost doubled since the end of February. This leads to carriers introducing or increasing fuel charges, reducing some routes, adjusting schedules, and extending flight times due to bypass routes and refueling. The routes between Asia, Europe and the Middle East, as well as markets dependent on fuel imports, are most affected by the situation.
Flights with a load of less than 75% and a range of over 8 thousand km, for example, between secondary European cities and Asia, generally risk becoming unprofitable. Most experts and associations predict that up to 120 such destinations may be cancelled by the end of 2026. At the same time, the role of major hubs will increase: Dubai, Doha, Istanbul and Singapore will become even more important hubs for transit passengers. The share of such transfers may grow from the current 38 to 45% of all international flights.
According to experts from the International Air Transport Association, the availability of long-distance travel for the mass tourist is likely to decrease. Tariffs on the Europe–Asia routes may increase by 12-18%, according to various estimates, and on the Middle East–Africa routes by 15-22%. At the same time, intra-Asian and domestic flights will rise in price slightly, in the range of 2-4%. For transatlantic flights, the forecast is moderate: prices will rise by $45-60 per ticket, which will maintain demand, but make travel less affordable for budget categories of passengers.
According to ATOR, the increase in fuel charges has already affected the cost of tours: for example, to Egypt — an average of +$ 57 per person, to Thailand — +$119, to Vietnam — +$161. Tour operators try to smooth out the price increase within the framework of travel packages, however, self-assembly of the tour (flight and hotel separately) it becomes unprofitable due to the rise in price of air tickets with luggage.
The current situation is a relatively short—term crisis that can last about a year, says Fyodor Borisov, chief expert at the Institute of Transport Economics and Transport Policy at the National Research University Higher School of Economics. Major national air carriers have a sufficient margin of safety and support from the state, which will allow them to survive this period. Although some weak players may face bankruptcy, systemic changes in the industry are not expected within one year. Companies will be forced to reduce flight programs and incur losses, he predicts.
Traditional tourist flows are also likely to be redistributed. Europe as a destination may lose from 8 to 10 million tourists due to the rising cost of flights, especially from the Asia-Pacific region. Domestic tourism, on the contrary, will receive a boost: in the United States, domestic travel is expected to grow by 4.2%, in China by 6.1%, and in India by 9.3%. The luxury segment will remain stable: business and first class passengers are less sensitive to price changes, which will allow premium carriers to maintain margins even in times of crisis.
As a result, the global air transportation market will obviously go through a structural "reassembly" this year. The winners will be those who control fuel risks, have a strong internal base and access to the premium segment. For a traveler, this means that long—distance flights will become more expensive and less frequent, but regional destinations will become more accessible and more frequent.
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