AirAsia stays course on Bahrain hub as Iran war clouds aviation growth plans

Malaysia’s AirAsia said on Monday that it is still planning to launch a new hub in Bahrain by June, even as the ongoing Iran war continues to disrupt one of the world’s busiest international air corridors and forces airlines to rethink regional expansion.

The low-cost carrier’s commitment, while conditional on how the conflict evolves, stands out at a time when most global airlines are scaling back routes, delaying launches and rerouting flights to avoid the Middle East. For now, AirAsia appears to be bucking that trend, offering an early signal of how carriers are balancing short-term disruption with longer-term bets on the Gulf as a key aviation destination.

Details: In a press release outlining its strategy to navigate rising fuel costs and growing uncertainty across global aviation markets, AirAsia reaffirmed its commitment to develop Bahrain as a key hub connecting travelers between Asia, the Middle East and Europe.

The service is scheduled to commence on June 26, 2026, with the airline expressing “optimism” that conditions in the region will normalize by then. The first route is scheduled to connect Kuala Lumpur to London via Manama. Under a plan announced last November, Southeast Asia’s largest carrier hopes to turn Bahrain into a major transit node by 2030, potentially operating dozens of daily flights and challenging established hubs in Dubai and Doha.

The airline said it has already begun reallocating capacity toward higher-performing routes such as Central Asia and Istanbul to capture displaced demand — a strategy increasingly mirrored across the industry. The broader aviation sector has been thrown into turmoil since the conflict erupted. Major Middle Eastern hubs, including Dubai, Doha and Abu Dhabi, have faced disruptions, while airlines globally avoid Gulf airspace, leading to longer flight paths and higher fuel costs.

Amid disruptions to energy flows through the Strait of Hormuz, jet fuel prices have surged to more than double their 2025 levels, according to industry data, compounding operational pressures. The fallout is most pronounced in Asia and Oceania, where the average price of a barrel of jet fuel was $208.79 during the last week of March. 

Capacity data from aviation consultancy Cirium shows the scale of the impact. Passenger flights rose just 1.2% year over year in March, far below earlier expectations, while Middle East airline capacity plunged more than 50%. 

Airlines have responded by suspending routes deep into the year — and potentially longer. Delta Air Lines, for instance, has delayed multiple routes to Israel, including a planned service from Boston to Tel Aviv, until further notice. Meanwhile, some long-haul carriers that compete with Gulf airlines are seeing opportunities to capitalize on lost regional routes. Australia’s Qantas, for instance, is adding flights to Europe to meet rising demand. 

Why it matters: The fate of AirAsia’s Bahrain plan could represent an early test of whether the Gulf can sustain its role as a critical transit corridor between Europe and Asia amid prolonged geopolitical instability.

For decades, Gulf carriers have built dominant long-haul networks by leveraging their geographic position between Europe and Asia. AirAsia’s bet on Bahrain reflects a broader trend of new entrants seeking to tap into that model — including through lower-cost alternatives and secondary hubs.

But the current conflict is exposing structural vulnerabilities, with ongoing regional instability repeatedly impacting busy air corridors across the Middle East in recent years. This comes after the COVID-19 pandemic hammered the airline industry. 

If the war proves short-lived, the long-term impact on hub expansion plans could be limited, with pent-up demand and strong travel fundamentals supporting a rebound. However, a prolonged conflict risks reshaping airline strategies more fundamentally — pushing carriers to diversify routes, invest in alternative hubs or scale back ambitions in the region altogether.

Know more: Even before the war, competition among Gulf aviation players was intensifying. Saudi Arabia raised the stakes with the launch of Riyadh Air, a new national airline that recently revealed its first 15 destinations.