Will the war drive Gulf carriers to build redundancy into their hub-and-spoke model?

The Gulf aviation industry’s biggest strength became a liability during the war. For the past decade, Gulf air carriers have built around a simple but powerful idea: the hub-and-spoke model. Instead of flying passengers directly between cities, airlines funnel travelers from multiple “spoke” cities into a central hub — Dubai, Doha, or Abu Dhabi — before redistributing them onward. The system has allowed carriers to aggregate demand, make the most efficient use of their fleets, and offer long-haul routes on a frequency that wouldn’t be viable if they ran point-to-point.

By perfecting this model, Gulf carriers turned their cities into global crossroads, capturing a significant share of the Asia-West corridor and intensifying competition for legacy airlines such as Lufthansa.

But the war has put the model under a structural stress test. The model assumes stability and consumer confidence — and during the war, airlines and passengers alike are rerouting around the Middle East altogether, giving rise to nascent alternative routes — and if these prove sticky even after conditions stabilize, regional carriers could face real competition.

What made this disruption stand out is that it is not just a traffic shock, but a network efficiency shock, Sindy Foster, principal managing partner at Avaero Capital Partners, tells EnterpriseAM. “The hub model depends on tightly synchronized connection banks, and when that breaks, revenue deteriorates faster than costs,” Foster adds.

“At peak disruption, close to 80% of Asia-Europe services via the Gulf were effectively removed,” Foster says, adding that “the gap left behind is larger than the rest of the system can absorb in the short term.” Avaero provides strategic, commercial, and investment banking advisory services to the aviation and aerospace industry across emerging markets.

Foster figures Gulf carriers are losing an average of USD 625-750 mn each week, going by “disclosed revenue run-rates and observed capacity reductions. That scales to roughly USD 8 bn over three months and USD 30 bn or more over a year if conditions persist.”

Gulf majors have good reasons to worry if the ceasefire doesn’t hold. Some of the flow that once moved through Dubai, Doha, and Abu Dhabi may shift elsewhere, Edmond Rose, aviation consulting director at ASM Global Route Development Consultants, tells EnterpriseAM. More airline networks outside the Middle East are likely to redeploy capacity to capture demand that would otherwise flow through Gulf hubs, he adds.

And even as the ceasefire helps regional airlines restore some of their pre-war activity, we’re still far from a return to pre-war frequencies and volumes. The GCC’s top three — Emirates, Etihad, and Qatar Energy — entered the ceasefire with some 18k flights and 5.4 mn seats are still missing from April’s pre-war schedule, and many of the high-frequency routes on the Europe-Asia corridor are still seeing flight reductions ranging from 5-40%, according to data from aviation analytics outfit Cirium.

Still, the Gulf model’s underlying economics — scale, connectivity, and cost efficiency — are intact, Foster tells us. That could change, however, if the war drags on: “If disruption extends into a 6-12 month window, behaviour begins to shift — corporate travel policies adjust, passengers avoid perceived risk corridors, and airlines start reallocating aircraft more permanently,” Foster said.

With the ceasefire (mostly) in place, how recovery unfolds will come into focus. “Recovery will come in two phases. Schedules can recover relatively quickly once airspace stabilises — but demand will follow only if confidence returns,” she adds.

The brutal math of the detour

The immediate hit to end-of-season earnings will be defined by the cost of the detour. Rerouting a single long-haul flight around restricted airspace could add up to two hours of block time. According to industry cost-modeling, this adds USD 7.5k in unbudgeted fuel and crew costs per flight hour. With fuel prices trending upward globally, the fuel burn penalty of a two-hour detour is becoming the primary driver of margin erosion for the quarter.

At the same time, war-risk ins. is becoming a key differentiator: While non-Gulf carriers are being quoted USD 70k–150k per flight into the region, Emirates has secured fleet-wide coverage of roughly USD 100k per week — allowing risk to be priced across its network rather than per rotation, materially lowering its marginal cost base.

Gulf carriers benefit from structurally more favorable ins. terms — supported by sovereign backing, scale, frequency of operations, and closer coordination with local regulators — creating a cost advantage even amid disruption.

What’s next

Watch for the recovery to take one of two trajectories, depending on whether the current ceasefire will last.

Scenario A is a quick-ish bounce-back: This scenario assumes that the most intense disruption has peaked, with a full restoration of regional supply and traffic likely not to occur until the summer months. Airlines will still suffer from rising costs due to crude flow disruptions through 2Q, with unhedged jet fuel prices expected at USD 140-150 per barrel.

Scenario B? The ceasefire breaks and we have a long-term slump. If the conflict persists, volumes drop and stay down — and we may have serious challenges to the Gulf’s main carriers.

In either recovery scenario, keep an eye on the next frontier of competition. The main medium-to-long term risk for GCC carriers now is not just losing market share — It’s losing the share that matters the most for their revenues, and that is higher-yield traffic.