Aviation

Written by Gabriel Boutier-Downey

Key developments in 2025

For many aviation insurers, key developments in 2025 centred on the disputes arising from the retention of aircraft in Russia following the invasion of Ukraine.  In June 2025 Mr Justice Butcher delivered his ruling following the trial in actions brought by lessors, including AerCap, DAE, Merx and others, holding the insurers on the Contingent War Risks policy liable for the losses.  At the time of writing, the decision of the Court of Appeal on War Risk insurers' application for permission to appeal on certain grounds is awaited, but the Judgment has and will continue to have an impact extending further than the case in which it was delivered.  Claims by the worldwide leasing community against the reinsurers on the airlines' policies are scheduled for trial before the English court in October 2026, and disputes continue in Ireland, the United States and elsewhere on similar claims. 

Moving away from the Russian claims, in the 2025 AIR we noted that 2024 had seen an increased number of reported incidents of "clear air" turbulence.  This trend has continued, with a further increase in incidents in 2025; including an increase in passenger injuries as a result of extreme turbulence.  Experts predict turbulence to treble over the next couple of decades. 

As evidenced by the commentary on the Political Violence section of this Annual Insurance Review, the global political situation continues to be volatile.  President Trump's announcement in November 2025 that airspace around Venezuela should be considered closed led to suspension of flights by various airlines, and the retaliatory suspension of take-off and landing rights by Venezuela.  The Gaza conflict, and the hostilities between Israel and Iran, have led to increased airspace closures, with the Houthi missile attack of May 2025 targeting Ben Gurion airport with the stated aim of deterring commercial air traffic to Israel.

Any hit to passenger confidence will be unwelcome to an industry facing possible contraction due to increased environmental concerns.  The drive to net zero may push costs – and fares – up, with a consequential impact on passenger numbers.

What to look out for in 2026

The aviation industry faces emerging pressures in a rapidly changing world. In a world increasingly focussed on artificial intelligence it seems likely that aircraft manufacturers and airlines will look to maximise their use of the world's latest tool. Increased reliance on automatic systems and software is not without risk, as evidenced by the recall of 6,000 aircraft following an unprompted altitude change in a Jet Blue flight thought to arise from a flight control malfunction following a solar flare.  (Somewhat ironically, the inability of Russian airlines to access software updates, as a result of the Western sanctions, meant that the malfunction, which affected the latest version of the software, did not impact the Airbus aircraft retained in Russia).  Monitoring vulnerabilities and keeping on top of updates will be key, but extra measures may be needed to stay ahead of malicious actors.  In September 2025 suspected Russian attackers disrupted the navigation system of an aircraft carrying the European Commission President.  In the same month the crew of a Spanish aircraft carrying the defence minister reported an attempt to disrupt satellite navigation whilst flying over Kalingrad.  Against this backdrop, President Putin's increasing diatribes against the European Union are a cause for concern. 

In a topic becoming familiar across this Annual Insurance Review, insurers will need to consider carefully the cover they are offering in light of these increased vulnerabilities.  At the same time, the increased natural disruption hitting commercial air travel as a result of turbulence will likely make reliance on using new and emerging technologies essential, to deliver sophisticated monitoring tools to enable pilots to predict and avoid a bumpy ride; insurers may need to consider the safeguards put in place by airlines to minimise the impact of turbulence, given the potential for liability claims in the event of passenger injury.