US policy rattles Middle East aviation industry

As the global aviation industry reels from erratic US policy shifts, newly imposed tariffs add further unpredictability.

Mass job cuts across the US government have shaken consumer confidence, dampening spending on holidays and flights. Government-funded travel has also plunged – up to 90 percent of overseas aid project trips have been scrapped.

Visitor numbers from Canada to the US dropped sharply in the first quarter of the year, driven by a weakened Canadian dollar and negative consumer sentiment toward the US.

Additionally, reports of impending stricter US entry requirements and an increase in visa rejections are fuelling industry concerns.

All this political and economic upheaval is spooking the aviation sector – just as the summer travel season begins. 

Middle Eastern carriers are monitoring the situation closely, facing growing uncertainty about the months ahead.

Capacity imbalance

These demand-side challenges coincide with a long-standing imbalance in capacity between US and Middle Eastern carriers.

The global aviation industry operates under Air Service Agreements between countries, which set terms for how much capacity can be offered between them. 

In the case of the US, many of the agreements with Middle Eastern nations permit unrestricted capacity – allowing approved airlines to operate as many or as few flights as they wish.

So far, Middle Eastern carriers have demonstrated strong interest in the US market, not only serving direct local demand but also connecting passengers from South Asia through their hub airports.

In contrast, US airlines have shown little interest in flying directly to the Middle East – a trend clearly reflected in flight data. 

Beyond a daily American Airlines flight to Doha and United Airlines service to Dubai, US carriers have virtually no presence in the Middle East market.

American Airlines’ Doha route is part of its broader Oneworld Alliance partnership, while United’s Dubai service is tied to its codeshare agreement with Emirates. 

In both instances, the strategic value lies not just in the direct service itself, but in the onward domestic traffic these partnerships help generate – often outweighing the revenue from the once-a-day international flight.

In 2024, United Airlines generated more than $86.5 million in domestic network revenue from passengers connecting to the US through Middle East airports. This was largely driven by its commercial partnership with Emirates, with Dubai serving as the main source of that traffic and income.

Similarly, American Airlines earned about $17 million, the majority of which came via Doha, supported by its codeshare agreement with Qatar Airways. In contrast, Delta Air Lines – despite being the only US carrier with a formal strategic alliance in the region – generated less than $1.4 million.

These figures show that US airlines can capture substantial revenue from the Middle East market with minimal direct investment or operational risk.

Beyond these headline numbers, significant passenger flows also pass through major European gateways, such as London, Paris and Frankfurt, where passengers flying with Middle Eastern carriers then connect onto US airline partners – adding to the market’s broader strategic value.

Despite the Trump administration’s stated commitment to fair bilateral trade, the disparity in air services is obvious. Middle Eastern airlines operate at a 19:1 ratio of scheduled flights to the US compared to their American counterparts.

But with US airlines making virtually no direct investment in the Middle East market – while collectively earning over $105 million on their domestic networks from passengers arriving via Middle Eastern hubs – it looks like this is a trade or tariff imbalance the administration is content to overlook.

John Grant is partner at UK consultancy Midas Aviation

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