Insurers will still cover airlines flying to and from the Middle East after the breakout of war in Iraq last week.

The reassurance from Britain’s Aviation Insurance Offices Association has been welcomed by airlines which had expressed fears of insurers pulling cover and triggering a similar aviation crisis to the one post-September 11.

Insurers are understood to be limiting coverage for flights to the region in their standard policies and charging special premiums specifically to cover airlines flying near the Persian Gulf on civil or military charters.

The “high-risk/high return” nature of the business allows airlines to keep running and insurers to enjoy a big profit.

And travelers will pay for it. From mid-April overseas travelers will pay 3% more for international flights. The move has been backed by the International Air Transport Association (IATA) as airlines try to deal with increased war spending on security, fuel and, of course, insurance.

IATA Director-General Giovanni Bisignani said as well as increased fares, passenger flights have been re-routed north and south of the war zone. Travelers will find flights in the Gulf region are an hour or more longer because of the detours.

While airlines have previously adapted well to dealing with war costs, the loss of an estimated $50.5 billion after September 11 has made them cautious. IATA expects an immediate 15-20% drop in international travel.

Mr Bisignani has pleaded with governments, airports and industry partners to “share with the airlines the burden of this new crisis and to endeavour to reduce their charges”. But there’s little chance of that happening, with airports similarly affected by schedule cuts and falling patronage.