Soaring jet fuel prices fuelled by the Middle East conflict could drive more airlines into bankruptcy and accelerate industry consolidation over the next two years, according to the International Air Transport Association (IATA).
According to Reuters, IATA director-general Willie Walsh said airlines are grappling with higher fuel costs and longer flight routes following disruptions linked to the conflict involving the US, Israel and Iran.
Budget carriers are among the most vulnerable as they lack higher-margin revenue streams such as premium cabins, corporate travellers and loyalty programmes.
The pressure has already claimed one casualty, with Spirit Airlines collapsing last month. Walsh warned that more carriers could face similar challenges if fuel prices remain elevated.
“Unfortunately, I think there will be some carriers that will find this high fuel price very difficult to cope with,” he said at IATA’s annual summit in Rio de Janeiro.
He said some airlines may be forced out of business, while others could become acquisition targets for larger rivals.
Airlines are also expected to trim unprofitable routes to protect margins, while higher airfares are likely to persist amid elevated fuel costs.
Despite the pressure, Walsh maintained that the low-cost carrier model remains viable, pointing to the strong performance of Ryanair.
He also highlighted ongoing aircraft and engine delivery delays from Boeing, Airbus, GE Aerospace and Pratt & Whitney, which continue to hamper fleet expansion and efficiency improvements.
Looking ahead, Walsh said COMAC could emerge as a serious competitor to Boeing and Airbus within the next decade, although certification and technology hurdles remain.
On sustainability, he acknowledged that the aviation industry’s 2050 net-zero emissions target is becoming harder to achieve due to slower-than-expected progress in sustainable aviation fuel development.
