A billionaire Dubai-based jet tycoon is warning that global airlines could soon go bankrupt as the Iran war squashes travel demand and sends jet fuel prices soaring worldwide.
Avia Solutions Group Chairman Gediminas Ziemelis said he’s planning to shift a chunk of his business’ 145 jets from Europe to Asia and Brazil as the Middle East conflict grounds flights and wipes out demand in Europe – similar to the COVID pandemic.
“We need to be ready for any area, district, jurisdiction and geopolitical risk,” Ziemelis, 48, told Bloomberg.
“If it lasts more than one month, we may see potential first bankruptcies” of airlines around the world, he added.
Airlines in the Middle East – like Qatar Airways, Bahrain’s Gulf Air, United Arab Emirates-based flydubai and Air Arabia – are facing the worst challenges of the moment as they have been forced to cancel thousands of flights and evacuate passengers, crews and planes.
Carriers around the world are also taking a hit as Iran’s blockade of the key Strait of Hormuz pushes oil prices above $100 a barrel, and longer flight routes designed to skirt around portions of the Middle East force planes to guzzle up more fuel than usual.
As of Wednesday, average jet fuel prices for Chicago, Houston, Los Angeles and New York had hit $4.56 per gallon, according to the Argus US Jet Fuel Index.
That’s already weighing on profit margins, since jet fuel and labor are typically the two main costs for carriers – with some warning of massive losses if the conflict rages on.
United Airlines CEO Scott Kirby recently said in a note that his company would lose $11 billion if oil prices remain at current levels – $6 billion more than the company made in its best year ever – forcing it to hike airfares by 20%.
The airline has “the time and the luxury” to ride out higher fuel prices for now as customers continue to purchase tickets at high volumes, but “it may be a challenge to continue passing through much of the increased fuel price if oil stays higher for longer,” Kirby said.
Like Ziemelis, Kirby compared the current airline crisis to the pandemic, saying, “If these other guys make the same mistakes they made six years ago, and if the forecast above $175 per barrel is right, you’ll see airlines not survive.”
In a speech Wednesday night, President Trump said the US will exit Iran in two to three weeks – though he vowed to bomb the nation “extremely hard,” spooking investors who are fearful of a lasting energy supply disruption.
Summer travel is set to be more expensive as airlines have started charging hundreds more for tickets in the weeks since the US and Israel launched strikes on Iran on Feb. 28.
Earlier this week, JetBlue hiked its checked bag fees to offset “rising operating costs,” signaling that carriers could start passing along higher costs to flight add-ons, as well.
JetBlue did not specify the size of the price hike, though its website showed checked bag fees of $49 on domestic flights – up $4 from the last time it hiked luggage fees in 2024 alongside United Airlines, American Airlines and Alaska Air.
Southwest told The Post it doesn’t “have any immediate plans to increase fees due to macroeconomic factors.” Delta and United declined to comment, and American Airlines and Alaska Air did not respond to The Post’s inquiries.
Fares are higher almost across the board, especially on last-minute flights that are typically purchased by business travelers, according to an analysis by Deutsche Bank.
The lowest prices for flights within 24 hours to Asia, Europe and beyond have hit $1,900 on average – a huge increase from the $830-to-$1,000 range that prevailed the day before the war started, according to Deutsche Bank.
Ziemelis, who’s worth roughly $1.7 billion, according to Bloomberg, relies on a risky business model that involves renting Avia’s planes out for short periods to airlines that already have pilots, crews and maintenance support. He said he’s already seen demand drop.
But he is still hopeful that his business and others will be able to weather the fuel shock.
“After COVID, all companies which survived made extraordinary profits. So sometimes crisis is opportunity,” he told Bloomberg.
