Airlines see gains wearing off from Persian Gulf rivals’ absence

Published Mon, Jun 8, 2026 · 07:06 AM

[LONDON] European carriers that benefited from the temporary absence of their formidable Middle Eastern rivals in recent months are preparing for their ensuing booking boom to fade again as the Gulf carriers begin staging a comeback.

“It’s something that is going to finish soon” because the changes have not been structural in nature, Luis Gallego, the CEO of IAG, said in an interview at the International Air Transport Association (Iata) annual meeting in Rio de Janeiro on Sunday (Jun 7).

Gallego’s comments were echoed by other executives at the event, the biggest annual gathering of airline executives. The fallout from the war in Iran has dominated conversations at the annual meeting, as airlines grapple with elevated fuel costs that Iata estimates will cut the industry’s overall profit outlook in half this year.

For now, some carriers have sought to benefit from the regional competitive dislocation. British Airways, which is part of IAG, as well as Deutsche Lufthansa and Air France-KLM, have pushed more business onto routes to Asia and parts of Africa.

That’s a reversal from seeing their long-haul business come under increasing attack from the likes of Emirates and Qatar Airways in recent years, as the Gulf carriers funnelled more east-west traffic through their local hubs.

But airline executives sense their moment of opportunity will soon come to an end as Emirates, Qatar Airways and Etihad Airways get more of their planes back into the air and increase capacity again.

“My personal view is that it’s only temporary once the Middle East situation stabilises for a period of time,” Cathay Pacific Airways CEO Ronald Lam said in an interview in Rio. “I believe things will probably go back to normal.”

Since March, Cathay had seen a rise in demand, especially across its long-haul flights, Lam said on Sunday.

Air France-KLM CEO Ben Smith said he expects 5 to 10 per cent of customers that previously flew through Middle East hubs will prefer to fly non-stop flights even once capacity is fully restored in the Middle East.

“The three Gulf carriers plus Turkish, they’re extremely aggressive,” he said. “It’s not going to be a surprise to us.”

To lure fliers back to the Middle East, the Gulf airlines may resort to aggressively cutting fares. Etihad said at the Iata event that it’s slashing tickets prices by keeping fares at a stable level despite the 70 per cent jump in fuel costs. BLOOMBERG