UBS says geopolitical uncertainty is reshaping European aviation capacity in ways that could prove both a headwind and a tailwind for the sector's biggest carriers
The Middle East conflict is driving a sharp and accelerating contraction in airline seat capacity on routes between the region and Europe, with May schedules now showing a decline of around 26% year on year, UBS has warned, significantly worse than the 10% contraction recorded the previous week.
April schedules are showing an even steeper fall of approximately 54%, according to the Swiss bank's analysis of Cirium data, which tracks real-time changes in seat capacity across global aviation lanes.
June is showing only a marginal positive in capacity growth from the Middle East to both Europe and Asia, UBS noted, suggesting airlines are now planning for a protracted period of disruption.
The bank also flagged a broader moderation in European long-haul capacity growth, which it now estimates at 0.9% for the second quarter of 2026, down from a prior estimate of 1.8%, while third-quarter long-haul capacity growth has been trimmed to around 5.1% from 5.6%.
Short-haul capacity across Europe is holding up better, with second-quarter growth estimated at around 5%, broadly in line with prior expectations.
UBS said it remains concerned about jet kerosene supply and the potential for further fuel price increases despite any temporary pause in the conflict, adding a further layer of uncertainty for airline earnings.
The note highlighted that geopolitical disruption can cut both ways for European carriers, as capacity pulled from Middle East routes by affected airlines can free up pricing power for others operating into less exposed markets.
The analysis includes detailed capacity split data for major European carriers, including IAG, Lufthansa, Air France, easyJet, Ryanair, Wizz Air and Jet2, showing how each airline's exposure to Middle East routes differs and how that mix is expected to shift through 2026 and into 2027.
IAG, whose capacity split shows a small but meaningful Middle East component, is among those whose exposure UBS has mapped against the evolving schedule data.