Podcast: Geopolitics And Rising Costs Reshape European Aviation

European aviation is operating in an increasingly volatile and unpredictable environment, with geopolitical instability and rising costs shaping airline network strategy. This episode explores some of the key takeaways from Routes Europe 2026, which took place in Rimini, Italy.

Subscribe Now

Don't miss a single episode of the award-winning Check 6. Follow us in Apple Podcasts, Spotify or wherever you listen to podcasts.

Discover all of our podcasts at aviationweek.com/podcasts

AI-Generated Transcript 

David Casey (00:10): Hello and welcome to Window Seat, Aviation Week's Air Transport podcast. I'm David Casey, editor-in-chief of Routes. Welcome aboard. On this episode, we're coming to you from Rimini in Italy where Routes Europe 2026 has been taking place. The event brought together more than 1,100 attendees from across airlines, airports, and destinations to discuss the future of air services. And it comes at a very interesting time for European aviation. Demand remains strong and airlines are continuing to grow, but the mood across many of the sessions this week has been notably more cautious and pragmatic than in previous years. Conversations have centered on how airlines and airports are adapting to a far more volatile operating environment, one that has been shaped by geopolitical uncertainty, fuel price pressure, sustainability costs, and increasing consolidation across the market. Now, I am joined by three colleagues who've been heavily involved in the conference program as well as some of the 5,000 or so pre-scheduled meetings that have been taking place here this week.

(01:15): We have Victoria Moores, European bureau chief at Air Transport World. Tony Griffin, senior vice president at Aviation Consultancy ASM and Edmond Rose, consulting director at ASM. Victoria, Tony and Edmond, thank you so much for joining us. So Victoria, let me start with you. I think one of the moods and one of my takeaways this week has been there is still confidence, but it is coming at a cost and it is quite cautious at the minute. Demand's still there. Airlines are growing, as I said, but in almost every panel discussion this week, it's touched on volatility, it's touched on disruption. What would you say are the biggest takeaways for you this week? What themes have really stood out and dominated some of the conversations that you've been having?

Victoria Moores (02:00): Thank you, David. Yeah, I think that it's not unusual for the aviation industry to be in crisis. Let's face it, it's pretty much business as usual, but the strong takeaway that I got from the conversations on stage and around the show is that things really are incredibly challenging and it's not just the obvious surface level things like the conflict in the Middle East, like fuel supply shortages. It's also the fact that we've got lots of different issues layering one on top of the other. And a part of that is also particularly in Europe, obviously that's the theme of the show. We've got so many regulatory commitments and obligations that airlines have to observe. So it's that layering and then trying to keep the operation resilient where there is still demand and trying to really reassure passengers that things are okay, that flights are still operating, that there is still fuel.

(02:56): And obviously fuel supply is one of the themes. When to be honest, it's hard to give passenger certainty when it's challenging to find certainty in yourself. So there was a real push towards partnership communication data. Those were some of the themes I picked up.

David Casey (03:11): Okay. I think we can touch more on fuel supply shortly, but Tony, what were the main topics for you?

Tony Griffin (03:17): So yeah, I've had about meetings with about 20 airlines of all different operating models and things. Things I picked up is they were surprisingly calm, surprisingly positive given the situation you're in and maybe that's the lesson, not the lessons, but the experience of COVID-19 was so profound that airlines have learned that stay calm and see how things evolve. I caveat that with a couple of things that it depends very much on how long this situation prevails for. I got a sense that it's okay now, but if this carries on for much longer as in carries on the fuel price, then they're going to have to do more radical things than they're doing now. The other sense I got was that 2027 planning is on hold and they're dealing with the here and now.

Victoria Moores (04:17): Just to jump onto that point about planning being on hold, one of the points I heard from IAG was that obviously normally by this point they would be looking at their summer 2027 schedules. The contact that I was speaking with said that right now they don't have much visibility over winter, let alone the summer, which shows how short those planning horizons are.

Tony Griffin (04:38): Yeah. The other thing that quite a few of them mentioned was the fact that at the moment they are operating under hedge conditions. When those hedges finish, then it's a different story. Obviously, no airline can hedge now because hedge rates are not attractive.

David Casey (04:55): Well, we heard from Jan Maerteling, the chief commercial officer, Wizz, and he was saying that they're 70% hedged for the summer season, but in terms of when it comes to the winter season, there's less visibility over that.

Victoria Moores (05:07): And also there's the fact that hedges guarantee a price. They don't guarantee supply and supply is part of what's in the question. How will we get through this period if the war continues indefinitely?

David Casey (05:20): Well, none of us obviously will know that, but Edmond, what were the key takeaways for you?

Edmond Rose (05:26): I think the same as Tony, that airlines are very unwilling to commit to what they will do next summer 2027. I also heard airlines saying that they had expected they may take some more aircraft, but now those plans are on hold, at least in the short term. What I interpret that as is there is a lot of short-term uncertainty and the airlines are trying to deal very hard with the short term and while they want to look further ahead and they always do look further ahead, they're just not going to commit further ahead.

David Casey (06:00): Are we essentially back to how it was during the pandemic then? Is this a mini pandemic? What we saw then was airlines had to be very, very reactive. They were making so many decisions in season. There was no real long-term outlook. It was more short-term changes. Is that back in network planning now?

Edmond Rose (06:18): I think some of the larger airlines and the better funded ones are definitely still looking longer term. Of course they are and particularly those with really long-term fleet plans. It's some of the smaller airlines that have more flexibility in their fleets that are very uncertain and probably rather more short-term focused.

Victoria Moores (06:38): When we're talking about that flexibility, obviously one of the solutions that you go to when you need flexibility in the fleet is wet leasing. I think one of the things that I'm going to be curious to watch over the next few months is the impact on wet lease operations, not because of people bringing in short-term capacity but because of them deciding not to take it. And we already saw that in the U.K. as Jota Airways is no longer, and I do wonder what kind of impact, particularly on regionals that depend quite a lot on getting into that wet lease market for additional revenue, then it's going to be challenging for that model.

Edmond Rose (07:20): Yeah. I also spoke to an airline, which is a wet lease operator at this summit, and they're not able to place their aircraft as they were before. So it's a very, very clear short-term impact on that market.

Tony Griffin (07:32): Yeah. I'd just like to mention demand in terms of passenger demand. And I think what we're seeing is actually some opportunities and that's for destinations that are geographically well placed to pick up traffic that has been sort of scared of going to Turkey, places like Egypt. Egypt and Turkey are not really in this theater of conflict and yet I think Turkey has suffered. So the perceptions of the market are very sensitive to what's going on in the world. So places like the core markets of Greece, Spain, Portugal, Italy have all benefited and probably will benefit more as we go through the summer.

David Casey (08:19): Italy in particular seems to be seeing huge growth this summer. We're seeing Ryanair growing. We're seeing Wizz at this event announced three new based aircraft from the winter season. So it seems to be a real growth market here. I mean, is that a temporary thing? What is driving that growth? How do you see the market here in Italy evolving?

Tony Griffin (08:39): Well, I think one thing that is driving that growth is short sectors. So less than two hours in Europe is better for airlines than flying four hours to Turkey for obvious reasons, fuel price and actually fuel uptake.

Victoria Moores (08:57): Yeah. One of the things, again, that we heard from Jan Maerteling from Wizz was obviously they took the Airbus XLRs to operate out of Abu Dhabi. That no longer fits with their business model, which was quite a strong statement from him. They're now deploying them as just straight up NEOs in Europe. But the point that he was making to that short sector thought that you brought in there is that rather than deploying an aircraft on one six-hour, five-, six-hour route, he'd prefer to put that aircraft onto three, two-hour sectors because you can get the ancillary revenues for the seats and for the bags off each one of those three sectors, whereas you only get one sector for that six-hour flight. So I thought that was interesting. And he very much said they're coming back to the stable core markets of Europe basically because they want to really consolidate their presence here.

(09:50): But I think that you had some thoughts as well on Wizz's growth plans.

Edmond Rose (09:53): They certainly still have some very strong growth plans for this summer and next year they will still be taking more aircraft and aircraft will be ungrounded and Jan was definitely optimistic about their deployment of those aircraft. And indeed I had Samuel from the network planning side on one of my panels and he was also looking for all the opportunities and seeing that there will be opportunities.

Victoria Moores (10:20): Yeah, that figure that he gave and put into context, he was saying that they're going to grow their capacity by 30% from '25 to '26. And he put that in context. He said that's the same as a medium-sized airline, remembering that Wizz has got 264 aircraft growing by 30% is absolutely huge, particularly right now when the lease is so uncertain.

David Casey (10:44): Speaking of that uncertainty, we've talked about fuel prices. Has there been any worries this week about fuel supply from some of the airlines that you've been speaking to?

Tony Griffin (10:54): It's not been mentioned in any of the airline meetings. I think that's because fuel price is probably a bigger concern to the airlines at this time than supply, although supply is obviously critical to the ongoing operation. I'm sure both are taxing the minds of the airline executives.

Edmond Rose (11:17): Exactly the same. I've not heard people talk about fuel shortage. It's very much the high price that is driving the behavior of the airlines, particularly where they are less hedged than their competitors. And that I think is a very major worry for some of them that their competitors are well-hedged and are able to bear through all this. And where you have a weak hedging position, you are much more likely to be watching which flights you operate and taking out the ones that aren't going to be positively contributing to profit and revenue.

Victoria Moores (11:52): Yeah. And similarly on stage, that question did get asked during several of the panel sessions. It's like, where are you up to on fuel supply? And the answer was very much still everything seems OK for now. Typically, the answer we're getting is for the next kind of six weeks-ish, we are getting visibility from the supplier saying there's not going to be a problem. It's more heading into winter where that question is, how are things going to be, particularly if things continue?

David Casey (12:19): And as we head into winter, obviously cost pressures are still weighing heavily on airlines. What does this mean for airports, particularly some of the smaller airports that have got thinner routes maybe into a hub connection. Are those routes at risk? We heard from Montserrat from the European Regions Airline Association and she spoke about how many regional routes have disappeared permanently in recent years and some of those communities that are really dependent on those connections. Are we likely to see a lot of those thinner routes being cut this winter?

Tony Griffin (12:52): I think yes is the short answer to that. Good example. Katowice Airport have lost Frankfurt connection through the restructuring of Cityline. That was their only hub connector, which is problematical because now they don't have that link to a major intercontinental hub. I think it's a natural consequence that airlines will look to remove underperforming routes given the price of fuel stays as it is and winter, as we know, is the toughest time of the year. So those factors sadly create a bit of a perfect storm for some small airports. The other thing that I think the consequence of what this will be is the barriers to entry are going to be much higher for any startup or any new airline ventures. It's going to be extremely difficult and certainly a nonstarter for airlines to start up in the winter period in Europe this year, I would say.

David Casey (14:00): And in terms of incentives then, are they going to play an even greater part in securing, maintaining and opening new routes?

Tony Griffin (14:08): I think there's an interesting debate within the airport airline community about support. Do the stakeholders and airports try and help the airlines mitigate costs, just focus on that, or do they try and incentivize airlines to generate demand through marketing initiatives and so on? So it's a tricky one, but I get a sense that any help that airlines will get to help the bottom line on an individual route is the priority. The marketing, as I said, demand has not necessarily dropped. It's just being redistributed, whereas the costs, they've gone on. So if an airport or stakeholders can help reduce the costs, then that is obviously going to help.

Edmond Rose (15:00): Another interesting thing I heard, and it's not a winter thing, it's a summer thing is that in some cases the airlines are reluctant to do some of the thinner leisure routes. Some of them are very focused on the big, big destinations. And I wonder if that's going to be a little bit of a theme that the smaller leisure destinations are going to have to work a bit harder to keep the airlines coming to their destinations.

Victoria Moores (15:33): And we also heard during the panels, this is going back to the topic of incentives, quite a strong message there from Edinburgh Airport where they were saying not every route should be incentivized, even if it's a new route. It really does depend on a case-by-case basis on whether or not it needs it, because ultimately routes do need to be able to stand on their two feet.

David Casey (15:54): I think carriers are really going to expect it from that. And we heard from Wizz, I think on the same panel who they said they've never, I think, opened a route without an incentive.

Tony Griffin (16:05): As far as the Wizz representative is concerned, she had never known a route not to benefit from incentives.

David Casey (16:13): One other topic that I wanted to touch on briefly before we finished, I think it came from one of your panels, Edmond, that you were involved with was about the use of AI in network planning. I think there was, I'd say, cautious curiosity. I think airlines are using AI, but they've not fully figured out how it can fully benefit network planning decisions and whether to open a new route or whether to cut a route or whatever. What was the key takeaways from some of the things that you heard on that panel?

Edmond Rose (16:43): Yeah, it was exactly that, that they started to use it with caution. They're not going to use it to take all network decisions, but one of the airlines on a panel that I ran specifically mentioned they had run data through an AI, through a large language model and they had used that to get in 10 minutes what would have taken a morning to produce some ideas about which short-term cancellations they should make based on route data. And that was a really interesting use, but none of them was yet saying, "We're going to replace our network planning team at all." They were seeing it as a tool to aid their decision-making in this particular case with tactical cancellations. So very interesting to hear that upfront.

Victoria Moores (17:34): Yeah. I also noticed during the various conversations from the network planners, because we did have a lot of airline network planners on stage over the past few days, they were saying that there is a gut feel. There is very much a human part of network planning, and that's very important. Obviously, that's personified here with the human connections that are made during all of the meetings that take place. But one point that a panelist made was that in our day-to-day life, we all know how AI can get things wrong. And so that reliability is a very, very important factor of why we don't want to delegate this to AI just yet.

David Casey (18:14): Yeah,

Edmond Rose (18:14): And the gut can still be better.

David Casey (18:16): Yeah, I think that human element is important. I think there was a comment as well about the data can only tell you so much. I think there was a representative from airBaltic who was talking about the Ukrainian diaspora that had been displaced from Ukraine and was flying to Moldova. And it was the fact that they'd gone through the passenger list to see that it was Ukrainian surnames on the flight tickets and they realized where that demand was coming from. But obviously within the data, you might not necessarily be able to see that. Before we finish then, one final question for each of you, I asked this at Routes Asia when we were in Xi'an just a few weeks ago. It was probably a few weeks into the Middle East crisis then. There was still quite a bit of optimism from Tony I think and from Edmond, maybe a bit more caution.

(19:08): If we're to come back and we're to have this conversation again in 12 months' time when Routes Europe is in Antalya in Turkey, what do you think we'll be talking about then? What will be the key themes? Will it still be geopolitics dominating?

Edmond Rose (19:22): I would be thinking that this time next year we'll either be seeing a difficult economic situation, which is driving things, or we'll have had another great bounce back and I can't tell you which of those it's going to be.

Tony Griffin (19:36): Being the optimist, David, this current situation has only been going on for two and a half months and it might get resolved by the time we get home from this event. Who knows? A year is a long time in aviation as we all know. So I predict a period of stability, maybe not bounce back as in the significant bounce back, but certainly getting back on the trajectory that aviation has taken irrespective of all of these events that impact.

David Casey (20:08): Victoria, are you similarly optimistic? I think we heard from one panelist, the VP of network planning at airBaltic who said that aviation is a never-ending sprint running from one problem to the next.

Victoria Moores (20:20): I think that that's pretty accurate. It's that whole unprecedented thing that seems to come up in conversation a lot and a lot of the panelists were saying, "No, this really is quite different." But I think casting the mind forward 12 months. I think there's going to continue to be three core themes. So I'm just going for what is usually central at the middle of the industry, and that is costs because there's always going to be cost pressure and pressure to optimize the business. Resilience, which is to my mind coming up a lot higher in the conversation is how do you manage to keep your operations stable no matter what's going on out there? And then the third one is regulation, particularly in Europe. It's a very regulation-heavy environment. We've had the Draghi Report that's putting the focus onto competitiveness. We've got a new European aviation strategy that's scheduled to be coming out this winter.

(21:15): So I just think that that layering of regulation with the sustainable aviation fuel mandates, we've got the review of the ETS coming up this summer. We've got the new passenger rights rules, which were the aim was to make it that it wasn't going to be as tough on the industry, but it's now going to basically double the costs with the current proposal, which when an industry is constantly striving in the way that you just mentioned, can it sustain all of these various levels of intentional cost base coming from regulation on top of everything out there? So I think those are going to be the conversations next year.

David Casey (21:51): OK. Well, on that note, we are out of time for this week's Window Seat episode recorded here in Rimini at Routes Europe 2026. Just as a reminder, the next Routes event will take place in Frankfurt and that's from the 21st to the 23rd of October. So head on over to routesonline.com to find out more about that. So thank you, Victoria, Edmond and Tony for joining me today and thanks to our producer, Guy Ferneyhough. You can find more coverage from Routes Europe on aviationweek.com. And remember, don't miss an episode of Window Seat by subscribing wherever you get your podcast. Until next time, this is David Casey disembarking from Window Seat.