Kathmandu. Tensions in the Middle East are increasing operational and insurance pressure on airlines across Asia.
In a recent statement, Aon said that Asian airlines are facing higher insurance premiums and operating costs due to tensions in the Middle East. “This situation is creating an even more difficult risk environment,” said Stephen Rudman, head of maritime and regional aviation for Asia at Aon. In particular, it is affecting flight operations and cost structures. ’
Restrictions or increased risks in parts of vast airspace in the Gulf and Middle East have forced airlines to re-route. These reroutes are increasing flight time, increasing fuel consumption and in some cases even imposing payload limits on long-haul services.
The biggest impact is being felt on the Europe-Asia and Africa-Asia routes. That’s where airlines typically rely on more direct flight routes.
Over time, these changes are driving up operating costs and reducing the efficiency of aircraft and crew. To address these challenges, airlines are increasingly using digital tools and real-time data.
Rudman said airlines are now considering geopolitical risks as an ongoing part of their operating environment, not temporary disruptions. It is leading more formal policies on overflight and destination risk, as well as emergency planning for abrupt airspace closures.
Airlines are also placing more emphasis on fleet and network flexibility to enable quick adjustments when specific routes are affected. Insurance companies and insurance brokers are working with airlines. This includes the use of structured routing policies and advanced planning systems to develop programs that demonstrate robust risk management practices.
There is also growing interest in other risk solutions (such as captive insurance and parametric structures). This can help cover financial losses associated with route disruptions or airspace closures. “Singapore, as a regional aviation and insurance hub, is at the heart of these developments,” Rudman said. ’
The impact on the local insurance market is being felt primarily in war-risk and political violence coverage. Underwriters are increasingly examining the airlines’ risk in high-risk areas, including both direct flights and overflights, and are evaluating the risks in more detail on a route-by-route basis. –Agency
