Airlines face fuel price surge and longer routes amid escalating Israel-Iran conflict

Air India has already canceled flights to and from Tel Aviv’s Ben Gurion Airport, citing safety concerns amid the rising tensions in the Middle East.

As tensions escalate between Israel and Iran, airlines globally are facing a double blow: soaring fuel costs and lengthier flight routes due to the closure of airspace over conflict zones. Indian carriers, in particular, are bracing for significant disruptions, with longer travel distances and rising operational expenses likely to lead to higher airfares, analysts said.

The challenges airlines now face echo the disruptions caused by the ongoing Ukraine-Russia conflict.

Since early 2022, airlines have had to avoid Ukrainian and Russian airspace, resulting in a significant alteration of  flight paths, particularly for flights between Europe and Asia. The result has been longer routes, higher fuel consumption, and increased costs. The closure of key airspaces has led to ripple effects on flight times and schedules across the globe.  The Israel-Iran conflict threatens to extend these operational difficulties further.

Impact on Indian airlines

Air India has already canceled flights to and from Tel Aviv’s Ben Gurion Airport, citing safety concerns amid the rising tensions in the Middle East.

"All our flights are assessed daily for any potential security or safety risks whether it is in the Middle East or any other part of our route network. Adjustments are made, if required, to avoid areas of risk with minimal impact on our non-stop operations. The situation is being monitored closely," Air India said in an official statement.

"We are already flying over the Hindu Kush mountains when serving destinations in Eastern Europe and are flying on alternate routes around Israel and Jordan when flying to eight destinations in Western Europe," a senior Air India executive explained. "Safety of our passengers is our highest priority and going forward we will continue to avoid dangerous airspaces. At the moment, we have not taken a call to suspend any more operations."

However, the airline warned that rising fuel costs may soon be passed on to consumers. "The impact of fuel prices will unfortunately be passed onto customers if the price escalation for crude are beyond a level that the airline can sustain. There is a growing fear that air travel between Europe and the Middle East may be severely impacted if ongoing conflicts continue to escalate. We expect at least a 10-20 percent rise in airfares over the next month as passengers look to book their festival season plans in advance."

Wider global disruptions

Other airlines are also adjusting routes and suspending flights due to the conflict. Finnair has indefinitely suspended flights over Iranian airspace since May 2024. a Finnair executive noted. "Our flights from Doha will reroute over Egypt, slightly delaying travel times. Our direct flights from India to Helsinki will also avoid Iranian airspace until the ongoing conflict is resolved."

"Re-routing of flights due to current geopolitical tensions can result in longer routes and higher expenses for airlines operating flights to and from Europe, the Middle East, and Southeast Asia," said Manan Bajoria, Group VP Growth at travel portal ixigo.  “The broader challenges airlines face is that lengthy diversions will add to airline fuel costs and may lead to an increase in airfares across these routes," he added.

Major global carriers such as KLM, Wizz Air, Finnair, Delta, Qatar Airways, British Airways, Emirates, and Lufthansa have already suspended their services to Israel and Lebanon as of October 2. Similarly, Indian carriers like Air India, Vistara, and IndiGo, along with several international airlines, are avoiding Iranian airspace to ensure passenger safety, further complicating travel logistics.

Fuel price surge looms

Fuel costs, a significant operational expense for airlines, are expected to rise if crude prices spike in response to the escalating conflict. With airlines already stretched thin by the post-pandemic recovery, this surge threatens to disrupt travel affordability, particularly during the upcoming holiday season.

Though it's too early to gauge the full impact on airfares, industry experts predict a significant rise in ticket prices in the near term. As travelers gear up for the busy Christmas and New Year season, airlines are preparing for a challenging period of rerouted flights, delayed travel times, and higher ticket prices.