Conflict in the Middle East is having a substantial effect on the airline industry, worldwide, the International Air Transport Association (IATA) has reported, in its latest financial outlook report for the sector. IATA is the representative body for the global airline industry.

“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse,” highlighted IATA director-general Willie Walsh. “Globally, airlines are expected to see profitability halve compared to 2025. Profits will shrink from $45-billion in 2025 to $23-billion this year. And margins will shrink from 4.2% to 2.0%. All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices. Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year’s level. Smaller carriers that started the year with weak balance sheets are certainly struggling. At the regional level, all are in the black but with sharply reduced financial performance, with the exception of the Middle East. The Gulf carriers face operational uncertainty following a near complete shutdown of airspace at the outbreak of the war. These carriers are doing an amazing job maintaining connectivity, but major financial impacts are unavoidable.”

Africa is the region expected to have the strongest growth in air passenger demand this year, at 10%. (By comparison, the forecasts for the other regions are 5.1% for the Asia-Pacific, 5% for Latin America, 2.8% for Europe, 0.8% for North America, and -11.4% for the Middle East.) African air passenger demand growth for last year was estimated at 9.8%, which was also the highest for all regions.

African carriers’ passenger capacity is predicted to increase by 7.7% this year. The figure for last year was estimated to be 8.7%.

However, net profits for African airlines for this year are forecast to be $0.1-billion, compared with the $0.3-billion estimated for last year. Profit per passenger is expected to fall to $0.40 this year, as against the $2.10 estimated for last year.

“African hub carriers are seeing the strongest growth in traffic as it re-routes to avoid the Middle East,” explained IATA. “However, the region’s profitability is expected to weaken as a result of cost-side vulnerabilities, particularly regarding the supply and price of fuel. Combined with typically lower aircraft utilisation and weaker balance sheets, these factors will cap the revenue upside from shifting traffic flows, resulting in weaker expected net profit margin in 2026.”

Such gains that African airlines make will probably be concentrated in the continent’s small number of hub airlines, with their established networks linking Africa, Europe and Asia, points out the association. The brunt of dealing with this difficult operating environment will be borne by Africa’s smaller and more fragmented airlines.

Further, the pre-existing structural constraints on African airlines remain. Their network efficiency is reduced, and operating costs increase, by weak infrastructure, fragmented airspace and limited cross-border coordination. Moreover, they suffer from limited access to capital and restricted financial capacity, restricting their ability to develop their networks and expand their fleets.