Airlines have adapted their operations through longer routings and revised scheduling since the Iran war began on 28 February. These moves have contributed to increased flight times, fuel consumption and overall operating costs.
However, the repositioning of aircraft outside the Gulf has helped mitigate the risks of a concentration of aircraft at Middle Eastern hub airports and of a single incident generating multiple claims, according to global law firm White & Case.
In a high-level overview of the potential impact of and challenges posed by the US-Iran conflict to airlines, lessors and financiers. White & Case says airlines that have continued to operate to the Middle East, despite the Iran war, are paying increased war-risk premiums, thereby increasing operating costs on such routes. Specialist reinsurers have also tightened war-risk exclusions to limit liability exposure.
Overall, the insurance impact of the conflict has been more measured, with S&P reporting that the war poses a limited threat to insurers. Some impacted carriers have repositioned some of their fleet to Europe (e.g., Teruel in Spain, Geneva and London).
In addition, given that several airlines, like British Airways, Lufthansa and American Airlines have reduced or suspended routes to the Middle East, there have, to date, been no reports of insurers issuing notices of cancellation for their aircraft insurance policies for Middle Eastern operations.