European airlines face a sharp and accelerating contraction in Middle East seat capacity, with UBS warning that the structural risks to the sector may outlast any diplomatic resolution to regional tensions.

Analysts at UBS, the Swiss investment bank, said capacity on routes to and from the Middle East fell again in the most recent week, extending a deterioration that has gathered pace since early March.

Schedule data compiled by aviation analytics firm Cirium shows Middle East capacity is now tracking around 22% below comparable year-earlier levels in March, with the contraction deepening to approximately 39% in April.

The figures represent a material worsening from UBS's previous monitoring round and underline the degree to which geopolitical uncertainty is forcing airlines to pull back from one of the world's key long-haul markets.

The Middle East route network carries particular commercial weight for major European carriers, including International Consolidated Airlines Group SA (LSE:IAG), the owner of British Airways and Iberia, Lufthansa and Air France-KLM, all of which rely on the region both as a destination market and as a connecting hub for onward traffic to Asia.

Capacity pressures are not confined to the Middle East, however.

UBS revised its second-quarter long-haul capacity growth estimate for European airlines down to approximately 3%, from a prior forecast of 5%, while short-haul guidance was left unchanged at around 5%.

Third-quarter capacity estimates were nudged modestly higher for both segments, at approximately 5.6% for long haul and 4.6% for short haul.

The UBS team flagged an additional risk that investors may be underweighting: potential shortages of jet kerosene, the aviation fuel, could drive prices higher even if Middle East hostilities ease.

That dynamic, the analysts argued, could place further downward pressure on capacity as airlines adjust their networks in response to elevated operating costs rather than security concerns alone.

China-Europe and US-Europe routes continue to show positive capacity growth, offering a partial offset, but the Middle East remains the dominant near-term drag on the European aviation demand outlook.

UBS has received compensation from companies covered in its research within the past 12 months. Investors should be aware the firm may have a conflict of interest that could affect the objectivity of this report.