Stephen Rudman, head of Asia maritime and regional aviation at Aon, said the situation in the Middle East highlighted the growing interdependence between geopolitical risk, operational resilience and insurance within the aviation industry.
In a statement discussing the impact of tensions in the Middle East, Ruderman noted that the situation is creating a complex risk landscape for airlines across Asia, with the most direct operational impact being on routes.
“We are seeing parts of the Gulf and wider Middle East airspace restricted or at higher risk, so airlines are bypassing affected flight information areas,” the executive explained.
He continued: “This often means longer flights, higher fuel burn and, in some cases, limited payload on long-haul routes. Over time, this increases operating costs and can reduce aircraft and crew productivity, particularly on the Eurasian and non-Asian legs which typically use more direct corridors.
“Airlines are responding through a more sophisticated use of data and digital tools. Modern flight planning systems receive real-time NOTAMs, airspace restrictions, weather and safety advisories and then dynamically optimize routes to balance safety, time, fuel and overflight costs.
“In operations control centres, airlines are running integrated ‘control tower’ dashboards showing real-time fleet position, crew status and airport constraints, which enables them to manage diversions and delays in a more coordinated way.
“Many are also investing in dedicated geopolitical risk monitoring so that they can quickly adjust course or suspend services as conditions change.”
Going forward, Ruderman said airlines will begin to view geopolitical disruptions as structural features of the operating environment rather than one-off events.
Rudman added: “This is driving more formal governance around overflight and destination risks, clearer internal policies on where to operate and not operate, and contingency plans for sudden airspace closures. Fleet and network flexibility is becoming increasingly important so airlines can reallocate capacity or adjust flight schedules if key corridors are unavailable.”
Elsewhere, he noted that insurance can be part of the solution, not just as a cost line.
Insurers and brokers are reportedly working more closely with airlines to build programs that identify strong risk controls, such as documented routing policies, strong safety oversight and the use of advanced planning tools.
Ruderman said there is also growing interest in more tailored solutions in some cases, including the use of captive and selective parameter structures to help address the financial impact of sudden airspace closures or route suspensions.
Ruderman concluded: “Overall, the situation in the Middle East highlights how closely geopolitical risk, operational resilience and insurance are currently intertwined for the aviation industry.
“Singapore is at the center of this conversation as a key aviation and insurance hub in the region.
“For Singapore’s aviation insurance market, the impact is mainly on war risk and political violence insurance, not just standard hull and liability insurance.
“Underwriters are paying close attention to airlines’ exposure to high-risk areas (whether through direct services or scheduled overflights) and the quality of their risk management.
“Overall, we are seeing upward pressure on war insurance premiums and a more granular line-by-line assessment of risk exposures, including the introduction of sub-limits or more stringent terms for operations close to conflict zones.”
