Airfares are set to stay elevated through 2026, even under a best-case ceasefire scenario

UAE airfares could stay elevated through much of 2026 as Gulf aviation works through longer flight paths, thinner capacity, and higher fuel costs, according to a Tourise and Oxford Economics report (pdf). Even under a positive resolution scenario, global fares could remain 5-10% above pre-war expectations this year — with the pressure likely to show up more clearly later in 2026 as fuel hedges and advance bookings delay the pass-through to ticket prices.

Why the UAE is exposed: Gulf hubs handle around 14% of global transit traffic, while roughly 20% of Europe-Asia travel typically connects through the region. The disruption has already hit capacity hard, with Middle Eastern carriers operating around 50% fewer flights y-o-y in March. Forward bookings through major Gulf hubs for 2Q and 3Q fell by more than 40%. International capacity to and from Middle Eastern countries was also nearly 40% lower y-o-y in April, while passenger demand fell almost 50%.

A reallocation story rather than a demand collapse: The report says travelers are more likely to adapt than cancel, shifting toward shorter booking windows, regional and domestic trips, and stronger value-hunting. Under a ceasefire scenario, global travel is still expected to grow 6% in 2026, down from a pre-war expectation of 8%. If hostilities resume, global travel could fall 1%, while sustained disruption could drive a 3% decline.

REMEMBER- Airlines are leaning harder on flexibility to keep travelers booking as fare pressure lingers. Emirates had already offered unlimited no-charge date changes on Dubai flights and cut refund fees on some fares, while the UAE recently scrapped visa entry fees for Indian travelers coming to Abu Dhabi for at least three nights.

Even a ceasefire may not mean cheaper tickets right away. Airlines would still need time to restore capacity, unwind reroutings, and rebuild schedules. If the disruption drags on, fares could rise by up to another 10% in 2027, while some carriers could bake alternative long-haul routings into their networks — testing the Gulf hub model beyond the immediate crisis.