As the Middle East war draws out, the global airline industry finds itself in the throes of a dramatic upheaval. The conflict, which erupted in early 2026 and involves the United States, Israel, and Iran, has sent shockwaves through the aviation sector, shuttering airspaces, grounding planes, and upending established travel patterns. The Gulf carriers—Emirates, Qatar Airways, and Etihad Airways—once the envy of the industry for their modern fleets and strategic hubs, are now scrambling to fill seats and maintain relevance amid the chaos.
On April 5, 2026, Etihad Airways, headquartered in Abu Dhabi, took an unprecedented step by slashing fares up to 50% on its long-haul routes for travel in May and June. The move is nothing short of desperate, reflecting the severe drop in demand caused by the regional conflict. According to Greek City Times, return economy tickets from London to Sydney via Abu Dhabi have plummeted to just £688, with business class returns starting at £2,465—an astonishing contrast to British Airways, where similar economy fares hover around £1,850 and business class exceeds £10,000. Fares from continental European cities are even lower, about 10% less than those from London, thanks to reduced airport charges.
These deep discounts are not limited to Australia. Etihad has applied similar price cuts to destinations across Asia and the Indian Ocean, including Singapore, Hong Kong, Bangkok, the Maldives, and Tokyo. Some fares are reportedly even lower than those offered during the height of the COVID-19 pandemic, a period many in the industry hoped never to revisit. The airline is also touting its new Zayed International Airport hub and offering free stopover hotel deals in Abu Dhabi, though travel advisories for the UAE remain cautious.
The rationale behind this aggressive pricing is clear: the war has led to widespread disruption and cancellations, leaving Gulf carriers with far too many empty seats. Etihad hopes to lure first-time passengers with these bargains, banking that once stability returns—possibly by July, when fares are expected to normalize—some of these travelers will become loyal customers.
But Etihad is not alone in feeling the pinch. The broader Middle East conflict has had ripple effects across Europe, particularly in Greece and Cyprus. Greek City Times reports that Greek and Cypriot tourism industries are under mounting pressure, with rising cancellations and increased operational costs for regional carriers like Aegean Airlines. The need to reroute flights around closed airspaces and the spike in fuel prices have added to the woes of European airlines, already grappling with the aftershocks of the war.
Meanwhile, the vacuum left by the Gulf carriers’ struggles has not gone unnoticed by their Western rivals. According to Bloomberg, airlines such as Deutsche Lufthansa AG, British Airways, and Air France-KLM have been quick to redeploy jets to destinations like India, Thailand, and Singapore in an effort to capture displaced passengers. This rapid redeployment, however, is not without its challenges. Surging jet fuel prices, aircraft mismatches, and the logistical complexities of opening new routes—landing slots, schedules, and staffing—make it difficult for European carriers to turn short-term gains into lasting momentum.
"The Europeans, they’ve just got to try and make hay while the sun is shining," said Rob Walker, an aviation analyst at consultancy ICF, in an interview with Bloomberg. The data tells a story of opportunity seized but also of uncertainty. United Airlines and Delta Air Lines, the largest US carriers, have expanded their long-haul widebody flying by 11% and 12%, respectively, adding new routes and boosting capacity on existing ones. Yet, the sustainability of these gains is in question.
The war has also exposed Western airlines to greater risk from jet fuel price volatility, especially since many US airlines do not hedge their fuel purchases. Last month, a surge in demand was observed as passengers rushed to book flights before rising fuel costs translated into higher fares. Still, European airline stocks have taken a beating: Lufthansa shares have fallen 17% since the war began, Air France-KLM is down 27%, and British Airways parent IAG SA has dropped 13%. Financial analysts at Morgan Stanley and UBS have cut their share-price targets for several European airlines, citing the ongoing fuel crisis.
On top of the Middle East conflict, airlines are still navigating the complications of Russian airspace closures, which began after Russia’s invasion of Ukraine in 2022. The closure of Iranian and Iraqi airspaces has forced carriers to reroute flights over narrow corridors above Georgia, Azerbaijan, and Central Asia, increasing flight times, fuel consumption, and operational complexity. "The issue for European carriers to Asia is airspace availability, and competing with Asian airlines that are more competitive and can fly over Russia," noted Conroy Gaynor, an analyst at Bloomberg Intelligence.
Asian airlines, for their part, are not standing still. Singapore Airlines has ramped up its long-haul services to London and Melbourne, Cathay Pacific Airways has boosted flights to Paris, Zurich, and London, and Air India and Qantas are adding capacity on European routes. This intensifying competition further complicates the recovery prospects for both Gulf and European carriers.
Despite the turmoil, industry watchers believe the current dominance of Western and Asian airlines may be fleeting. Richard Evans, a senior consultant at Cirium, told Bloomberg, "I would expect the Gulf carriers to offer highly attractive fares to rebuild traffic via their hubs, so maybe the European carriers will only have a short window of opportunity to exploit high demand and high fares." The Gulf hub model, which propelled Emirates to carry 55.6 million passengers in 2025 and turned Dubai into the world’s busiest international airport, is unlikely to be abandoned. The ambition to serve as global crossroads remains as strong as ever.
Not everyone is impressed by the Gulf carriers’ resurgence plans. Air France-KLM CEO Ben Smith voiced longstanding frustrations, saying, "It drives me crazy when people say, ‘These Gulf carriers are so amazing, they’ve got brand-new airplanes, they’ve got fantastic new airports.’ But when you’re in an unlevel playing field, you can produce that." For now, however, the playing field is anything but level, and the rules seem to change by the week.
For travelers, the landscape is fraught with uncertainty but also opportunity. Greek travelers in particular are being urged by Greek City Times to check current Foreign Office and Greek government travel warnings, book flexible tickets, and ensure they have comprehensive travel insurance. As the war rages on, the only certainty is that flexibility and vigilance are paramount.
In the end, the airline industry’s future hinges on the duration and outcome of the Middle East conflict. Will Gulf carriers reclaim their dominance with rock-bottom fares? Can European and US airlines convert short-term gains into lasting advantage? For now, every player is improvising, and the world’s travelers are watching—and waiting—to see what comes next.