AIRLINE STRATEGY CONSULTING IN A CHANGING GEOPOLITICAL MARKET - A difficult summer for European airlines: geopolitics, competitiveness and a changing market by Joao Vaz -
AIRLINE STRATEGY CONSULTING IN A CHANGING GEOPOLITICAL MARKET
The truth is that, for many years, the aviation industry has consistently demonstrated a remarkable capacity to bounce back, albeit with fluctuations in demand. The most recent COVID-19 pandemic is a case in point: by 2022, demand had already returned to pre-pandemic levels. Growing demand, the reopening of borders and the revival of international tourism have enabled airlines to regain levels of profitability that many had considered unlikely just a few years earlier. However, the summer of 2026 heralds a new wave of changes; despite the recovery in demand, the sector remains extremely vulnerable to external factors beyond the airlines’ control.
Contrary to what has been seen in recent years, the current challenges having the greatest impact are not linked to a lack of demand – as this remains high and is constantly growing – but are instead related to new geopolitical factors that shape and alter the competitive balance between regions and, consequently, between airlines.
The constant demand for flights between Europe and the United States, the closure of Russian airspace to Western airlines, and the growing instability and vulnerability of the Middle East are forcing airlines to restructure their entire strategic plans, both in terms of cost structure and the distribution of their flight networks. Consequently, whenever geopolitical factors are at play, the overall landscape changes, and some airlines benefit from their own geographical location and from the political and diplomatic systems in place in those countries, enabling them to operate with fewer restrictions than their direct competitors.
Transatlantic demand is beginning to shift
It is well known that the transatlantic market was, for many years, regarded as one of the most important and financially viable in global aviation. We also know that routes between the United States of America and Europe still account for a relatively significant share of the revenue of major European airlines, such as British Airways, TAP, KLM, Air France, Lufthansa and Iberia.
However, the summer of 2026 also saw some changes in demand for these transatlantic routes. According to Reuters, the decline in demand began in the first quarter of 2025, when many Europeans reconsidered travelling to the United States following Donald Trump’s policy proposals, including the suggestion to annex Greenland, the start of a global trade war and the tightening of border control policies. The appreciation of the US dollar also contributed to discouraging some travel.
During the summer of 2026, signs of a shift in demand were also observed. Several operators report a decline in bookings from European passengers travelling to the United States, whilst the reverse flow continues to show some growth. The European Travel Commission forecasts that arrivals from the Americas will continue to grow at a sustained rate of 4.2 per cent. This disparity between the America–Europe and Europe–America routes is the overall result of various factors, notably greater political uncertainty in the United States and changes to the US Administration’s trade and immigration policies, which are leading to a perception of instability amongst some passengers.
As mentioned above, Europe benefits from continuing to be perceived as a safe destination, free from major geopolitical upheavals and culturally tolerant, leading many American tourists to increase their travel to the Old Continent.
In short, although transatlantic routes remain robust and profitable, the dynamics have shifted, with a slowdown in demand and, consequently, a change in the balance of demand. This has forced airlines to restructure their strategic commercial capabilities and adapt their approach to one that is more resilient to economic and geopolitical factors.
The closure of Russian airspace continues to hit European airlines hard
One of the examples that, to me, best illustrates the influence that geopolitics has on commercial aviation is the closure of Russian airspace to the vast majority of Western airlines following the outbreak of the war in Ukraine. Before 24 February 2022, some of the routes connecting Europe and Asia flew over Russian airspace, as well as some others between the American Continent and Asia, reducing costs and making them more efficient.
Currently, Western airlines are prohibited from flying over Russian airspace and are forced to fly around it, significantly increasing costs due to the extra kilometres they must cover. The impact of this measure goes far beyond the issue of increased flight times; rather, it leads to higher fuel consumption, higher crew costs, costs associated with carrying more fuel, reduced efficiency of each airline’s flight network and, consequently, a loss of overall efficiency. Given that the airline market is considered one of the most competitive in the world, even small differences in costs can determine an airline’s profitability, making these previously little-known issues crucial to the survival of many routes that had previously been operated.
It is worth noting that whilst airlines are struggling to keep these routes afloat in the face of all these operational constraints, Chinese airlines are coming to the fore, as they do not face the same restrictions regarding Russian airspace. Obviously, this difference translates into considerable cost savings, which are reflected in ticket prices, thus giving them a clear competitive advantage.
On routes between China and Europe, Chinese airlines such as Air China, China Eastern and China Southern are able to operate these flights with much shorter flight times, consuming less fuel and thereby increasing the productivity of their fleets compared with European airlines, which in turn enables them to offer much more competitive ticket prices. This competitive advantage has enabled Chinese airlines to significantly strengthen their position in the European market, at a time when several airlines have been forced to reduce or suspend flights to various Chinese cities due to a general increase in operating costs.
Consequently, the market between Europe and China has become a clear example of how geopolitical decisions – which, at first glance, appear to have no bearing on the industry, can influence and disrupt the competitive balance of an entire sector.
This advantage has enabled Chinese carriers to significantly strengthen their presence in the European market at precisely a time when several European airlines have reduced capacity or suspended routes to various Chinese cities due to rising operating costs. As a result, the market between Europe and China has become one of the most striking examples of how geopolitical decisions can rapidly alter the competitive balance of an entire sector.
The Middle East: a new source of operational uncertainty
As if the closure of Russian airspace were not enough for airlines, they now face a second challenge of a geopolitical nature: the total instability of the Middle East.
The part of the world that, until recently, was the greatest facilitator of links between the West and Asia is now plagued by a pervasive sense of insecurity and mistrust. The breakdown of a stable regional situation has led various authorities and industry operators to avoid flying through air corridors in the Middle East, forcing them to redesign many routes between Asia and Europe. In countless cases, they have opted to use corridors further north, relying heavily on Turkey and the Caucasus region.
Once again, the deviation from the ‘normal’ route has led to longer flight times, increased fuel consumption and, in turn, higher costs for the entire operation, at a time when the price of jet fuel has risen again due to international tensions. Furthermore, instability in the region makes it difficult to plan long-haul networks, forcing airlines to alter their routes at short notice, thereby increasing the overall complexity of operational management.
At the same time, airlines face other costs associated with aircraft maintenance, wage pressures, delays in the delivery of new aircraft by manufacturers, and demand that is proving to be less price-elastic by the day. Consequently, this combination of factors is causing operating margins to shrink and severely limiting airlines’ ability to respond to new shocks. It is not surprising that the summer of 2026 could mark a new phase of consolidation and restructuring within the industry, particularly amongst smaller players or those with more fragile financial structures.
Clear Lift Perspective
Competitive advantage is no longer determined solely by fleet economics or network design. It increasingly depends on how rapidly airlines can redesign schedules, optimise fleet deployment and reallocate capacity as geopolitical conditions evolve.
Airlines that continue planning networks using historical demand rather than geopolitical scenarios risk structural cost disadvantages.
Clear Lift Executive Response Model
1. Monitor geopolitics, demand and cost indicators
2. Analyse impact on routes, costs and competitiveness
3. Plan reconfiguring networks, capacity and commercial strategy
4. Execute with agility, discipline and cost control
5. Optimise performance and resilience
At Clear Lift, we believe the future belongs to airlines capable of turning geopolitical uncertainty into strategic advantage through disciplined execution, operational excellence and data-driven decision-making.
“Geopolitical volatility is becoming as important to airline profitability as fuel prices or fleet strategy.” — Nicolás Rhoads, Founder & Principal
Conclusion
In an industry characterised by low margins and high fixed costs, even small differences in distance travelled, fuel consumption and the efficiency of the route network can translate into considerable competitive advantages. The summer of 2026 illustrates this precisely: whilst some airlines are able to capitalise on certain geopolitical and diplomatic conditions, others are seeing their competitiveness erode day by day, regardless of the management approach adopted.
Far more than an operational challenge, this landscape represents a strategic shift in the way airlines will have to look to the future. Efficient and effective management will become less tied to fluctuations in demand and traditional competition and increasingly linked to the ability to adapt to an ever more unpredictable geopolitical environment.
The airlines that outperform over the next decade will not necessarily be those with the newest fleets or the lowest costs. They will be those capable of translating geopolitical intelligence into faster commercial, operational and financial decisions. In today’s aviation industry, adaptability has become a competitive advantage.
About Clear Lift Aviation Consultants
Clear Lift Aviation Consultants is a boutique aviation consulting firm led by former airline executives with decades of global leadership experience. We advise airlines, airports, investors and governments on airline strategy, restructuring, commercial transformation, operational excellence, network planning, AI adoption, performance improvement and executive advisory. Our hands-on approach turns strategy into measurable business results.
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