Investing in Resilience: How Airline and Energy Sectors Can Be Positioned for Long-Term Stability

The airline and energy sectors are inextricably linked, with fuel costs representing one of the largest operational expenses for airlines. Over the past three years, energy infrastructure disruptions-ranging from geopolitical conflicts to climate-related events-have exacerbated fuel cost volatility, forcing airlines and energy companies to rethink their strategies for resilience. As investors, understanding how these sectors are adapting offers critical insights into long-term stability and growth opportunities.

Energy Disruptions and Airline Volatility

Energy infrastructure disruptions have directly impacted airline fuel costs and operational efficiency. For instance, U.S. airlines saw a 9.7% drop in aviation fuel consumption in September 2025 compared to August 2025, while fuel costs per gallon rose slightly by 0.3% to $2.304. This volatility is not isolated to supply-side factors; geopolitical conflicts have compounded the issue. Airspace closures and overflight restrictions due to instability in regions like Europe have forced airlines to reroute flights, increasing fuel consumption and contributing to airfare inflation. A notable example is the restricted access to Russian airspace, which has compelled carriers to take longer routes to Asia, adding both time and cost to operations.

Oil market dynamics further amplify this volatility. Non-OPEC supply disruptions have historically had a pronounced effect on fuel price swings, and this pattern has persisted in 2023–2025. During periods of heightened geopolitical tensions, jet fuel prices have surged by over 35% within weeks, driven by supply chain bottlenecks and oil market uncertainty. These shocks are compounded by delays in delivering newer, fuel-efficient aircraft, which have forced airlines to rely on older, less efficient fleets.

Resilience Strategies: From Alternative Fuels to Infrastructure Upgrades

To mitigate these risks, both sectors have prioritized resilience investments. In the energy space, infrastructure upgrades are gaining traction. For example, Saudi Arabia's adoption of dry-type transformers-critical for smart grids and renewable energy projects-has accelerated, with the market projected to grow at a 6.60% CAGR from 2025 to 2034. These transformers, favored for their fire-resistant properties and low maintenance, are integral to supporting renewable energy integration and grid reliability. Similarly, innovations like Axalta's Fast Cure Low Energy paint system have reduced energy consumption by 49% in industrial applications, showcasing how efficiency gains can lower operational costs while enhancing sustainability.

Airlines, meanwhile, are doubling down on sustainable aviation fuels (SAFs) and fleet modernization. While SAFs can reduce carbon emissions by up to 70%, their adoption remains limited, accounting for less than 1% of total jet fuel consumption due to high production costs. However, airlines are optimizing flight paths and schedules to offset these challenges. Fleet modernization efforts, though hampered by aerospace supply chain delays, have yielded measurable benefits. The International Air Transport Association reports that passenger load factors reached an all-time high of 84.0% in 2025, partly driven by efficiency gains from newer aircraft.

Hedging strategies have also evolved. With jet fuel prices falling 13% in 2025 compared to 2024, airlines with minimal hedging activity have benefited from reduced expenses. However, the high cost of SAF-4.2 times that of conventional jet fuel in 2025-remains a barrier. This underscores the need for strategic investments in scaling SAF production and infrastructure.

Financial Outcomes and Investment Opportunities

The financial returns on resilience investments are beginning to materialize. Reykjavík Energy implemented infrastructure upgrades in 2025 to enhance district heating and electricity production, resulting in a 31% year-over-year increase in consolidated profits and a 6.9% rise in cash flow from operations. Such outcomes highlight the potential for energy companies to balance sustainability with profitability.

For airlines, the benefits are more nuanced. While lower fuel prices in 2025 saved the U.S. industry $4.4 billion, supply chain bottlenecks have delayed fleet modernization, with aircraft backlogs exceeding 17,000 units and average wait times stretching to 14 years. Investors must weigh these operational challenges against the long-term value of decarbonization efforts and hedging flexibility.

Conclusion

The interplay between energy infrastructure disruptions and airline cost volatility underscores the importance of resilience-driven strategies. From smart grid technologies in the energy sector to SAF adoption and fleet modernization in aviation, the path to stability lies in innovation and diversification. For investors, the key is to identify companies and projects that align with both environmental goals and financial returns. As the sectors continue to adapt, those prioritizing resilience will be best positioned to navigate future uncertainties.