Flagging carriers: war shuffles the Gulf-airline flight deck - The Intelligence from The Economist Recap
Podcast: The Intelligence from The Economist
Published: 2026-03-18
Duration: 19 min
Guests: Simon Wright, Polly Berman
What Happened
America's use of bunker-busting bombs to target missile sites on the Iranian coast aims to clear the Strait of Hormuz, a critical passage for global oil and gas supplies. Meanwhile, Iran's continued missile assaults have forced Gulf states like Qatar, Kuwait, the United Arab Emirates, and Saudi Arabia to intercept inbound threats, causing disruptions in the airline industry.
Simon Wright, The Economist's industry editor, explains how the Middle East's role as a central aviation hub has been jeopardized. The Gulf carriers - Emirates, Etihad, and Qatar Airways - are known as super connectors due to their strategic location and state investment, but the ongoing conflict threatens this status. While connecting flyers may return post-conflict due to attractive deals, the tourism appeal of Dubai may face a longer recovery.
Airlines worldwide face route changes due to closed Gulf airspace, exacerbated by already avoiding Russian airspace since the Ukraine conflict. This results in longer, fuel-intensive journeys, with jet fuel prices rising due to supply issues in the Straits of Hormuz and shifting refinery operations from Europe to Asia. Increased fuel costs impact low-cost carriers more severely, as fuel constitutes a higher percentage of their operational costs.
Airlines like Ryanair and Qantas are somewhat protected by hedging against fuel price rises, whereas American and Chinese carriers, who stopped hedging due to perceived costs, could face significant financial strain. Airlines are grounding flights to mitigate high fuel costs, with Air New Zealand planning to cancel over a thousand flights until May.
This disruption presents opportunities for non-Gulf carriers to increase flights and fares, as seen with Germany's Lufthansa reporting increased bookings to Asia. However, long-term recovery depends on how quickly oil production and jet fuel prices stabilize and the Gulf carriers' ability to resume operations.
The episode also delves into the decline of fake meat products, once seen as a booming industry. Polly Berman, a news editor in New York, highlights how initial excitement and investments have waned due to poor taste experiences and the perception of these products as ultra-processed foods. Companies like Beyond Meat have seen significant drops in valuation and sales.
Lab-grown meat, though facing its own challenges, is viewed with cautious optimism. Despite regulatory hurdles, proponents believe it can offer a sustainable alternative to traditional meat without the ethical issues. Some anticipate it might find a place alongside conventional meat in supermarkets, unlike plant-based alternatives.
Key Insights
- The Middle East's central role in global aviation is at risk due to the ongoing conflict. Gulf carriers like Emirates, Etihad, and Qatar Airways face challenges as their strategic hub status is threatened, impacting their ability to attract connecting passengers.
- Jet fuel prices have surged due to supply chain disruptions in the Straits of Hormuz and shifting refinery operations from Europe to Asia. This has a disproportionate impact on low-cost carriers, as fuel constitutes a larger portion of their expenses.
- The decline in fake meat product popularity is attributed to poor taste experiences and their classification as ultra-processed foods. Despite initial market hype, companies like Beyond Meat have seen significant valuation and sales declines.
- Lab-grown meat is cautiously optimistic about its future, positioning itself as a sustainable and ethical meat alternative. While regulatory and scaling challenges persist, it could potentially find a place in traditional meat aisles in the future.