Airline chiefs meet in Rio amid fuel shock | economy

The annual summit of global airline CEOs kicks off in Rio de Janeiro today, Saturday, with the sector still being exposed to a more difficult test than the recovery test after the Covid-19 pandemic.

The Iran war has raised fuel costs and affected movements in the airspace, while companies are seeking to mitigate the impact by raising prices and reducing capacity.

The annual meeting of the International Air Transport Association (IATA) will be held from June 6 to 8, at a time when the fuel price shock intersects with another problem that airlines cannot address.
Quickly, there is a shortage of new aircraft.

Delayed deliveries from Boeing and Airbus prompted many companies to keep older, less fuel-efficient aircraft in service for a longer period, which raised maintenance and fuel costs in conjunction with the rise in oil prices.

The union, which represents more than 370 companies that account for about 85% of global air traffic, had expected before the outbreak of the war to achieve unprecedented net profits amounting to $41 billion this year, but executives and analysts in the sector lowered these expectations during the meeting.

A survey conducted by Deloitte – which included 21 CEOs of global airlines and published this week – showed that the volatility of fuel prices and inflation top the list of risks in the aviation field, prompting companies to intensify their focus on controlling costs and enhancing the strength of their financial conditions.

Fuel and labor are the main factors in pressuring costs facing airlines.

Sudden increases in fuel prices are difficult to absorb because a large portion of tickets are sold weeks or months before travel dates, and long flights also consume larger amounts of fuel, which reduces the efficiency of aircraft and their crews.

The challenge is to determine how much of an increase in fuel prices can be passed on to travelers before higher prices begin to undermine demand.

However, there are still limits. Raising ticket prices may help companies recover part of their fuel costs, but it could also deter budget-conscious travelers.

These risks are exacerbated in markets that suffer from weak currencies, declining consumer spending, or the lack of some airlines’ ability to set prices that major airlines enjoy.

IATA Director General Willie Walsh said, “The sharp decline of 46.6% in demand for airlines in the Middle East due to the war in the region was so great that it pulled global demand into negative territory at 3.4%.”

Walsh previously added: “The air transport situation remains highly volatile. The cost of jet fuel more than doubled in April, which is pushing up ticket prices. Forward schedule data also shows a decline in supply over the coming months, indicating that airlines are trying to balance higher fuel costs with weak demand.”

The Airports Council International Association in Europe also said that passenger traffic through the European airport network decreased by 0.7% during April 2026 compared to the same month last year, in the first annual decline since April 2021, when the sector began to restore its activity after the Corona pandemic.