‍DALLAS — With things heating up in the Middle East, the ripple effect is hitting the business of the skies hard. Airlines around the world are facing a significant challenge right now; when tensions escalate on the ground, the costs of staying airborne rise rapidly. 

The consequences of these changes include higher insurance prices, last-minute flight cancellations, and the complete redrawal of routes. This isn’t just a behind-the-scenes issue; it’s affecting travelers, airlines, and even entire flight networks.

A Day in the Life of an Air Operator

Imagine you are a flight operations manager at a midsize European airline. Every morning you wake up, check international NOTAMs (Notices to Air Missions), and sip your coffee while refreshing flight-tracking dashboards. 

In recent weeks, you’ve noticed shrinking corridors. Israel, Iraq, Jordan, and Iran; missions are shutting off one by one. Your once-straightforward route from Frankfurt to Dubai now wends its way south of Saudi Arabia, dipping into Egypt’s airspace, adding nearly two hours to every trip. And now, flights are being diverted, cancelled, or rerouted from the UAE as well. 

Fuel burns rise, pilots exceed duty hours, and rotation schedules get squeezed. Now guess what: war-risk insurance premiums just landed 30% higher than expected. That abrupt spike ripples through your spreadsheets and your soul.

Insurance Costs Are Going Up, Fast

Airlines typically hold two main types of insurance:

• All Risks: Covers standard operational damage (e.g., hull damage, passenger liability).
• War Risk: Covers losses specifically due to war, terrorism, or similar hostile acts.

War-risk insurance protects airlines in the event of a missile strike, hijacking, or armed conflict. Currently, those premiums are rising rapidly.

Recent estimates suggest that airlines might face a 10% to 30% jump in war-risk, hull, and third-party liability insurance costs during the upcoming renewal period. And that’s not even counting the usual increases in standard hull and liability premiums, which have already gone up after serious incidents like the recent Air India crash.

Insurance companies aren’t taking chances; they’re tightening rules and making coverage harder to get. Airlines are now being asked to pay more while also accepting stricter terms. For routes that pass through risky areas, some insurers are even backing out completely.

It’s About More Than Just Higher Rates

This isn’t just abstract number crunching. Behind the premiums are real fears. Airlines that fly near missile or drone launch sites risk a sudden tragedy, like MH17 in 2014 or PS752 in 2020, which insurers can’t ignore. As one TUI security lead put it, “Flight planning in this environment is extremely difficult… the absence of predictability always drives costs.” And insurers aren’t padding profits; they’re bracing for danger.

That fear isn’t limited to traditional war zones. Grey‑zone dangers – GPS spoofing, drone swarms, and sabotage – are biting. Underwriters now demand detailed risk-share agreements, and pilots are being allowed to refuse missions in iffy areas. No one wants to fly into what feels like a war movie.

When Insurance Simply Doesn’t Show Up

Here’s a gut punch: some insurers are flat‑out refusing war‑risk cover for specific national carriers tied to unstable regions. In October 2023, a wave of seven‑day cancellation notices went out to Israeli and Lebanese airlines – El Al (LY), Israir (6H), and Arkia (IZ). Without cover, flights have to be cut. Period.

Many standard aviation insurance policies explicitly exclude coverage for war zones or terrorist acts. When conflict erupts in a region, insurers may:

• Withdraw war risk coverage entirely.
• Issue a 7-day notice of cancellation or alter terms for airlines operating in or flying over conflict zones.
• Exclude specific countries or regions from coverage, leaving airlines without protection if they continue flying those routes.

European and U.S. insurers canceled war risk coverage for airlines based in Israel and Lebanon, forcing some carriers to rely on government-backed guarantees to maintain operations.

If insurance is available, the cost is passed on to the consumer. Even regional airlines in Lebanon discovered their war‑risk premiums had tripled overnight back in October 2023, forcing them to raise ticket prices just to stay afloat.

And this kind of thing isn’t new. During the Gulf War, some airlines saw their insurance costs for a single flight shoot up from around US$6,000 to as much as $125,000. Such a significant price increase can make flying through high-risk areas nearly impossible.

Fast forward to June 2025, and the situation has only grown more difficult. With new missile alerts, airspace closures, and escalating military activity across parts of the Middle East, insurers are once again pulling back. Some have either refused to renew policies or added strict exclusions for flying near high-risk zones. As a result, affected airlines are facing renewed financial strain, cutting more routes, and increasing fares further to manage the risk.

Airlines Feel the Pinch and Pass It On

Airlines are facing tough decisions due to flight delays, cancellations, and extra costs from refunding passengers. Even though oil prices jumped briefly when the conflict escalated, going up by 8% and touching $70 per barrel, they’ve started dropping again, as per recent reports from CNN. Still, longer routes and operational adjustments continue to raise costs.

Longer routes to avoid hot zones don’t just burn more fuel; they also cost crew overtime, disrupt schedules, and cramp aircraft utilization. Booking systems detect unpredictability, and, boom, ticket prices drift north. Some routes are just vanishing because airlines can’t make them work financially. 

Add to that the fact that airlines also have to pay out compensation under EU or US rules if a flight is cancelled at the last minute. That’s more money out the door, on top of the fuel costs, insurance hikes, and rerouting. What used to be a relatively routine 7-hour flight can suddenly turn into a financial mess, with airlines barely breaking even or, worse, taking a loss. All these extra costs eventually affect you, the traveller.

So What Does This Mean for You?

1. Expect surprises, as once-unimaginable flight networks are now being redrawn mid-trip.
   
   
2. Keep your ear to the ground—airlines are tweaking schedules daily. A flight that was green last week could be paused today.
   
   
3. Insist on coverage—when buying travel insurance, check if “acts of war or armed conflict” are excluded. Some policies do that now.
   
   
4. Budget real‑world stress—longer flights, connection delays, unexpected layovers. It’s not just logistics; it’s time away from home, added stress, and frayed patience.
   

Looking Ahead: What Could Change?

Some believe this is temporary, that the corridors will reopen after a de-escalation. Regional governments and IATA are urging more robust information sharing and NOTAMs coordination. However, if the conflict escalates or spreads, more airlines may withdraw entirely; furthermore, governments may intervene with war-risk backstops, as seen in the US following 9/11.

But we’re not there yet. For now, each flight is a tightrope dance between safety, cost, and scheduling; for us passengers, our travel plans are part of that equation.

Bottom Line

This isn't just belt-tightening; it shows how sensitive air travel is to global events. When conflict breaks out, everything feels the impact. Insurance becomes harder to secure, flight paths get rerouted, and even confirmed bookings can change at a moment's notice. 

For travelers, the best thing to do is to stay updated, be flexible, and be aware that plans may shift at any time. That’s the reality of flying in uncertain times.

Stay tuned and keep following Airways. Follow us on LinkedIn and Instagram for the latest updates as well!