Middle Eastern airlines are expected to record a combined loss of $4.3 billion in 2026. The forecast comes as the US-Israel-Iran conflict continues to disrupt air travel across the region. According to the International Air Transport Association (IATA), Middle Eastern carriers will be the only regional airline market expected to post losses next year.
IATA released the outlook during its annual general meeting in Rio de Janeiro. The association said ongoing conflict-related disruptions are creating significant challenges for airlines operating in the Gulf region. Consequently, carriers are facing lower demand, operational uncertainty, and rising costs.
Passenger Demand and Profitability Decline
IATA forecasts passenger demand in the Middle East will decline by 11.4% in 2026. Meanwhile, airline capacity is expected to decrease by 4.4%. As a result, net profit margins are projected to fall to minus 6.1%.
In comparison, airlines in the region recorded positive profit margins of 9.4% in 2025. The sharp decline reflects the impact of airspace restrictions, flight cancellations, rerouting, and reduced transit traffic. Furthermore, airlines are dealing with increased operational expenses linked to the conflict.
The association noted that Gulf carriers depend heavily on connecting passengers. Many travelers use regional hubs to connect between Asia, Europe, and Africa. Therefore, reduced transfer traffic is placing additional pressure on airline earnings.
Rising Fuel Costs Add Pressure
Globally, airline industry profits are expected to decline to $23 billion in 2026. This figure compares with profits of $45 billion in 2025. At the same time, net profit margins are forecast to shrink from 4.2% to 2.0%.
IATA expects average jet fuel prices to reach $152 per barrel in 2026. Consequently, global airline fuel costs could rise to $350 billion. Despite these challenges, global airline revenues are projected to increase to $1.165 trillion. The industry also continues to face aircraft shortages and supply chain delays.
