Geopolitical turbulence complicates airlines’ flight paths for 2027

Air travel will rebound in 2027, but constrained capacity, elevated fuel costs and geopolitical disruption will make profitable growth highly uneven across airlines.

• Global passenger growth is expected to recover to around 5% in 2027 after only 1% growth in 2026, while demand remains resilient outside the Middle East and economic growth is expected to improve.
• Middle East traffic halved in March and April 2026 and was still 15% below the previous year in August; because the region represented 9.5% of global RPKs before the war, the disruption reduced global growth by an estimated 2-3 percentage points.
• Jet fuel could rise from 27% of average airline operating costs in 2025 to nearly 35% in 2026, with tight refinery capacity and low inventories likely to keep prices elevated into 2027 even if oil prices decline.
• Airbus and Boeing had a combined backlog of around 15,000 aircraft by mid-2026, keeping aircraft values and leasing rates high and forcing airlines to operate older, less fuel-efficient planes for longer.
• European airlines benefited from traffic shifting away from Middle Eastern hubs, with Europe-Asia traffic up more than 12% year-on-year in August while Middle East-Asia traffic was down almost 12%; low-cost carriers remain more exposed to fuel costs, whereas premium carriers can pass on higher fares more easily.

Takeaway: Investors should expect a profitable-growth squeeze rather than a broad-based recovery, with premium and better-positioned European carriers more resilient than low-cost airlines and Middle Eastern hubs; fares are unlikely to return to early-2026 levels even if fuel prices ease.