UBS flags deepening Middle East flight capacity squeeze as conflict impact reaches into August Proactive uses images sourced from Shutterstock
UBS has warned that the conflict in the Middle East is still cutting airline seat capacity to and from the region, with the squeeze now extending into August.
The findings carry weight for London-listed carriers including IAG, easyJet, Jet2 and Wizz Air, whose networks touch the affected routes.
The bank’s latest capacity analysis shows the contraction is moderating each month, even as it persists.
June schedules from the Middle East point to a fall of about 24%, while July is now down 4.6%, having been positive a week earlier.
August capacity is set to drop around 3%, a sign that disruption is dragging on longer than expected.
UBS noted that geopolitics continues to shape how carriers deploy aircraft, cutting both ways for the European industry.
Reduced flying to the Gulf can dent revenue, but it can also tighten supply and support fares on other routes.
The Middle East, as defined in the analysis, includes Israel and Iran, the focus of the current conflict.
Capacity growth on European routes is also easing, according to UBS.
Long-haul seat growth is running at minus 1.6% for the second quarter and 3.5% for the third, both softer than a week earlier.
Short-haul growth is holding up better, at about 4% to 5% across the two quarters.
UBS named easyJet, IAG and Ryanair among the largest providers of short-haul capacity, with IAG and Air France-KLM (OTC:AFLYY) leading on long-haul.
There was better news on costs, with UBS reporting that jet fuel pressures have eased.
Jet kerosene prices are now up more than 50% so far this year, against a peak rise of over 160%.
Falling crude and a narrower crack spread, the margin refiners make, turning oil into jet fuel, have calmed fears of European shortages.