Iran Conflict Raises Fuel Costs, Airlines Cut Flights As IATA Slashes 2026 Profit Outlook

The global aviation industry is facing fresh turbulence as rising fuel prices linked to the Iran conflict force airlines to cut capacity and rethink routes. At the IATA Annual General Meeting in Rio de Janeiro, airline executives warned that higher jet fuel costs, aircraft shortages, and airspace disruptions are squeezing profits. IATA has nearly halved its 2026 global airline profit forecast from $41 billion to $23 billion despite strong travel demand. Airlines including LATAM and Azul are reducing flight frequencies, while longer routes caused by Middle East airspace restrictions are adding to operational costs and putting pressure on carriers worldwide.