The Aviation industry plays a critical role in global, regional and domestic economy across the world. It goes beyond merely being a transport system of Passengers and Cargo and is a key contributor to the global ecosystem of being a connected World as we see and experience it.In this strongly interconnected World even a small disruption in a region has its impact on the global scale. War in West Asia is a contemporary example of this disruption, and this article covers the various paradigms of Aviation in this situation which has been explained below.
By Amit Mittal
Oil Shock: ATF (Aviation Turbine Fuel)
As we all know, ATF (Aviation Turbine Fuel) is a big chunk of the operating cost of an airline, so as the increase in prices of Crude Oil price reached unprecedented levels, the increase in ATF prices was inevitable. Airlines which have huge consumption of ATF do fuel hedging and even airlines with advanced fuel-hedging strategies are taking a major financial hit, leading to margin pressure and significant overall losses.
The Smaller airlines rely on spot fuel prices, as they do not do fuel hedging. of their Some reports note that spot jet‑fuel prices have more than doubled in part of 2026. This squeezes margins, especially for carriers without fuel‑hedging or thin pre‑war profits.
Differential Pricing on ATF
The pricing on ATF has been kept in control by the Government of India up to some extent, wherein the Price of ATF is lower for Airlines flying domestically within India. However, the ATF price is higher for international Flights, General Aviation and Non-Scheduled operations. As major chunk of the passengers are domestic travelers in India there is relief to some section of the flyers.
One way to reduce price on ATF: GST instead of VAT
ATF falls under State Value Added Tax (VAT); rates can vary drastically across the country. Major airport hubs in certain states charge significantly higher VAT, leading to varying fuel costs depending on where the airline chooses to refuel.
To reduce the price on ATF I will suggest that bring ATF under GST With Safeguards such as:
1. Implement 12–18% GST slab with full Input Tax Credit (ITC)
2.Create a price stabilization buffer mechanism to absorb global crude shocks
3.Mandate state-level uniformity to eliminate tax arbitrage
This could have an immediate impact such as 15–20% cost reduction, improved airline liquidity, and fare stability
Safety Risks to Civil Aviation are the most serious concerns which the airlines face in a hostile or war situation because there could beMissile activity near civilian flight corridors which could lead to accidental shoot downs, GPS spoofing and navigation interference,and Drone threats. IATA and aviation safety groups have warned that conflict-zone risks are increasing globally.
Accordingly, Airlines tend to spend far more onReal-time threat monitoring,Security intelligence and working out the most suitable Route by doing Route risk analysis.
Rerouting and Capacity Cuts due to the closure of Airspace over Pakistan and Iran, the disruption has hit India particularly the Indian Airline operators flying to Europe and US where longer detours, more operational cost and fuel burn and cancelled routes have caused US-India airfares to jump by up to 150%.
Crippled Middle Eastern Hubs over this period is also a concern. The Middle East is a vital global transit gateway, usually handling about 14% of global transit activity.
Surging Fares and Shifting Demand Travelers are facing higher ticket prices, increased fuel surcharges, and a significant drop in seat availability—especially on long-haul routes connecting India to Europe and US.
Financial Strain and Industry Restructuring Smaller budget carriers with less cash reserves are bearing the brunt of the crisis. Global airline market capitalization has plummeted, and the industry faces an uncertain summer travel season.
Unequal Impact on Airlines
Not all airlines are affected equally.Most affected are the Indian carriers ,European airlines flying to Asia and Airlines dependent on Gulf transit routes
Less affected or temporarily advantaged are Airlines operating shorter regional networks and Certain local carriers enjoying reduced competition
There is Economics of the airlines globally
The balance has been disrupted by this conflict.
Major long-term consequences are Lower profits, Delayed aircraft expansion plans, Increased insurance premiums, Higher maintenance and crew costs due to refueling on long haul routes instead of direct flights, Reduced tourism demand and prolonged conflict could materially slow international aviation growth.
Environmental Impact as longer routes means More fuel consumption and Higher carbon emissions. IATA estimates that detours around conflict zones can increase fuel burn by around 13–15% on affected routes. That directly affects aviation sustainability goals.
When multiple corridors close simultaneously:
- Indian airlines lose their geographic advantage
- European and Gulf carriers may operate more efficiently
- Nonstop flights become harder economically
This is why Indian aviation has been under exceptional pressure recently.
A large chunk of European and American operators with a presence in West Asia have suspended operations, including American Airlines, United, Lufthansa, Swiss, British Airways, and Air France. While these carriers have previously railed against West Asian hub carriers, they maintained a presence in the region—either in partnership with the local airlines or as part of their networks—to funnel passengers into their systems, largely driven by major global alliances like Star Alliance, Oneworld, and SkyTeam.
Impact of War on Airports Specific operational and financial impacts on airports and the broader global industry include
Airspace Closures & Hub Disruptions: Major transit hubs like Dubai (DXB), Doha (DOH), and Abu Dhabi (AUH) have experienced periodic halts and operational shifts. Broad airspace closures over Iran, Iraq, Israel, Kuwait, and the UAE have triggered thousands of flight cancellations, leaving passengers stranded.
Some International Airlines flying to India have benefited because of Shifting Passenger Demographics: Due to the severe cancellations and longer detours faced by regional carriers, many overseas and foreign airlines have gained market share on routes to and from India and other affected regions.
Let’s hope that the war situation gets over soon and the global aviation industry comes back to normalization.
Views expressed are personal. The writer is the Director of AeroIntellect Aviation and has been in Aviation industry for over 20 years in Aviation Strategy, Aviation Consulting and inputs for Policy with International experience. Email: amitmittal@aerointellect.net
