Gulf's sky-high air fares may ease as conflicts settle

UAE leads region in ticket price increases

The volume of air passengers in the region is set to rise, the Airports Council International has forecast. Alamy

Middle East ticket prices may ease if geopolitical stability improves, as airlines will face fewer disruptions, can reopen direct routes and will be able to offer more attractive fares as competition increases.

Air fares in the Middle East rose by 15 per cent in the first half of this year, compared to the pre-Covid six-month period in 2019. Rising inflation and reduced airline competition on domestic and short-haul routes contributed to the fare increase, the Airports Council International, a global airports trade association, said in its latest report.

This surge contrasts to an average of 9 per cent decrease in fares recorded in the region during the first halves of 2014 and 2019, underscoring the rising cost of air travel.

Airport charges have had “minimal impact” in driving the air fares higher. Airport charges and turnaround costs, including government taxes, have generally increased below inflation levels and, in markets where these charges have moderately decreased, air fares have continued upwards, it said.

Among the Gulf countries, the UAE recorded the highest increase in air fares – 23 per cent – in the first half of 2025, compared to the first six months of 2019, ACI said.

This was followed by a 13 per cent rise in Bahrain, 9 per cent in Saudi Arabia, 7 per cent in Oman and 3 per cent in Jordan during the same period.

However, pressure on air fares may ease when the geopolitical situation in the Middle East improves.

Airlines are likely to benefit from fewer operational disruptions, fewer diversions and the ability to resume more direct flight paths, Stefano Baronci, director general of ACI for Asia-Pacific and the Middle East, told The National.

This will mean lower operating costs and improved efficiency, he said. “With fewer constraints on airspace and flight planning, more carriers may find it commercially viable to enter or re-enter certain routes that were previously avoided,” Mr Baronci said.

“The resulting increase in route options and carrier presence will strengthen competition, which historically tends to exert downwards pressure on fares.”

The end of conflict in the Middle East, combined with the continuing economic expansion in Saudi Arabia and the UAE, is a positive development for airlines and passengers. It will provide “strong momentum for sustained growth in air connectivity across the region”, Mr Baronci added.

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Peace deal

A ceasefire between Israel and Hamas has entered its sixth day under a peace plan put forward by US President Donald Trump. As part of Mr Trump's plan to end the Gaza war, Israel has agreed to halt its military advance, while Hamas has freed the last 20 surviving hostages it held. In return, Israel released almost 2,000 Palestinian detainees from the country's jails.

The Gaza ceasefire deal has ended two years of war in which more than 67,900 Palestinians have been killed by Israeli fire.

Israel's war on Gaza, which also involved attacks on Lebanon, Iran and Qatar, escalated geopolitical instability in the region during which airlines faced operational disruptions, flight diversions, route suspensions and higher operating costs.

Many Middle East economies rely on the travel and tourism sector for hard currency, job creation and business. According to an ACI forecast, passenger volumes in the region are set to rise.

Total passenger traffic in the Middle East is forecast to grow to 473 million in 2025, up from 440 million the previous year, underscoring the region’s “dynamism as both a destination and a global connecting hub”, it said.

Travel growth

In August, Middle Eastern airlines recorded an 8.2 per cent year-on-year increase in passenger demand, capacity rose by 6.9 per cent annually while the load factor reached 83.9 per cent, global aviation trade body International Air Transport Association (Iata), said in its latest report.

Global passenger demand was up 4.6 per cent compared to August 2024, it said. Numbers reached a new high during the peak northern summer travel season.

“Planes were operating with more seats filled than ever, with a record load factor of 86 per cent,” said Willie Walsh, Iata director general.

“Despite economic uncertainties and geopolitical tensions, the global growth trend shows no signs of abating, as October schedules are showing airlines planning 3.4 per cent more capacity.”

Despite economic uncertainties and geopolitical tensions, the global growth trend shows no signs of abating

Willie Walsh,
director general of Iata

However, he criticised the continuing supply chain disruption as well as aircraft manufacturers for delayed plane deliveries.

“Airlines are doing their best to meet travel demand by maximising efficiency, making it even more critical for the aerospace manufacturing sector to sort out its supply chain challenges,” Mr Walsh said.

Supply chain costs

Global airlines now face more than $11 billion from supply chain disruptions in 2025, a report by Iata and consultancy Oliver Wyman said.

The study found that airlines are paying excess fuel costs of $4.2 billion as they are forced to run older, less fuel-efficient planes because of delays to new aircraft deliveries, leading to higher fuel costs.

They are also paying additional maintenance costs of $3.1 billion because the global fleet is ageing, and older planes require more frequent and expensive maintenance.

Airlines are also facing increasing engine leasing costs of $2.6 billion for engines to replace those stuck in longer queues on the ground during maintenance. Aircraft lease rates have also risen by 20 per cent to 30 per cent since 2019, the report said.

Holding surplus inventory is costing airlines $1.4 billion as they must stock more spare parts to mitigate unpredictable supply chain disruption, it added.