The ongoing conflict in the Middle East has resulted in a more complex and evolving risk environment for airlines across Asia, affecting operations, costs and insurance dynamics. Aon's Head of Marine and Regional Aviation Lead for Asia, Stephen Rudman, said this as the US and Iran reached a two-week truce, giving a temporary reprieve from the war that has rattled the global economy.
According to Mr Rudman, the most immediate impact has been on routing. “From an operational standpoint, the most immediate impact has been on routing. We have seen parts of the Gulf and wider Middle East airspace restricted or subject to elevated risk, and therefore airlines are detouring around affected flight information regions,” Mr Rudman said. “That often means longer flight times, higher fuel burn and, in some cases, payload restrictions on long-haul routes. Over time, this raises operating costs and can reduce aircraft and crew productivity, especially on Europe–Asia and Africa–Asia sectors that would normally use more direct corridors.”
Airlines have also strengthened their use of data and operational tools. “Airlines are responding with much more sophisticated use of data and digital tools. Modern flight-planning systems ingest real-time NOTAMs, airspace restrictions, weather and security advisories, and then dynamically optimise routes to balance safety, time, fuel and overflight fees,” he said.
From an insurance perspective, the impact is being felt in war-risk and political violence coverage. “At the same time, there is scope for insurance to be part of the solution rather than just a cost line. Insurers and brokers are working with airlines to structure programmes that recognise robust risk controls – for example, documented routing policies, strong security oversight and the use of advanced planning tools,” he said.
Mr Rudman added, “In some cases, we are seeing interest in more tailored solutions, including the use of captives and, selectively, parametric structures that can help address the financial impact of sudden airspace closures or route suspensions.” He added, “For Singapore’s aviation insurance market, the impact is felt mainly through war-risk and political violence covers rather than standard hull and liability alone… In general, we have seen upward pressure on war-risk premiums and a more granular, route-by-route assessment of exposure, including sub-limits or tighter terms for operations closer to conflict zones.”