Flagging carriers: war shuffles the Gulf-airline flight deck - Economist Podcasts Recap

Podcast: Economist Podcasts

Published: 2026-03-18

Guests: Simon Wright, Polly Berman, Shira Aveono

What Happened

America used bunker-busting bombs to target missile sites on the Iranian coast, aiming to clear the Strait of Hormuz, while Iran continued missile assaults on Gulf states, affecting not just the oil industry but also global airlines. Simon Wright, industry editor, noted the Middle East's critical role as an aviation hub, with Gulf carriers like Emirates, Etihad, and Qatar Airways facing disruptions due to closed airspace and rerouted flights that increase journey times and fuel costs.

Jet fuel costs have surged, largely because 20% of the world's supply comes through the now-stalled Strait of Hormuz. Additionally, refining has shifted to Asian refineries, which are slower due to conserving crude oil supplies. This has resulted in uneven impacts across airlines, with low-cost carriers feeling more pressure due to their higher fuel cost percentages.

Many Western airlines, avoiding Russian airspace due to the Ukraine conflict, now face longer, fuel-intensive routes around the Gulf. While some airlines are hedged against fuel price increases, major American and Chinese carriers are not, risking significant financial losses. Air New Zealand is one airline already grounding flights in response to rising costs.

Despite current disruptions, there's an opportunity for non-Gulf carriers to increase flights and fares as Gulf airlines are out of action. For example, Lufthansa reported increased bookings to Asia. However, overall demand for air travel might decline amid economic slowdowns caused by high energy prices, although historically, air travel demand has rebounded quickly.

The episode also covered the trajectory of fake meat products, initially promising but now declining due to over-saturation and concerns about ultra-processed foods. Polly Berman discussed how companies like Beyond Meat have seen valuations plummet as consumer interest wanes, though there's ongoing interest in lab-grown meat.

Shira Aveono outlined the challenges facing PDF files due to AI's difficulty in parsing document semantics. Despite criticism, defenders argue that better AI tools could resolve these issues. Companies like Adobe and Google are developing AI tools to improve PDF usability, suggesting the format remains viable.

Key Insights

• The Middle East serves as a pivotal aviation hub due to the strategic location and heavy investment in Gulf carriers. Recent conflicts have severely disrupted air travel, impacting global airline operations.
• Jet fuel prices have become a major concern for airlines worldwide, compounded by disruptions in the Strait of Hormuz and shifts in refining locations to Asia, resulting in slower refining processes.
• Fake meat products initially gained popularity due to health and environmental benefits but have seen reduced sales due to market saturation and concerns over ultra-processed foods.
• PDF formats face challenges as AI struggles with document semantics, but companies like Adobe and Google are developing tools to address these issues, indicating potential for continued use.