* Iran war raises fuel costs, disrupts airspace

* Airlines test how far fares can rise

* Aircraft delays deepen pressure on margins

By Rajesh Kumar Singh and Allison Lampert

RIO DE JANEIRO, June 6 (Reuters) - Global airline chiefs

open their annual summit in Rio de Janeiro on Saturday facing a

sharper test of the industry's post-pandemic recovery, as the

Iran war drives up fuel costs and disrupts airspace while

carriers try to cushion the blow with higher fares and tighter

capacity.

The June 6-8 annual meeting of the International Air

Transport Association (IATA) comes as that fuel shock collides

with another problem airlines cannot quickly fix: a shortage of

new aircraft.

Boeing ( BA ) and Airbus delivery delays have

forced many carriers to keep older, less fuel-efficient jets in

service for longer, raising maintenance and fuel bills just as

oil prices have climbed.

IATA, which represents more than 370 airlines accounting for

about 85% of global air traffic, had forecast a record $41

billion in net profit this year for the industry before the war.

Industry executives and analysts expect that outlook to be

lowered at the meeting.

A Deloitte survey of 21 global airline CEOs published this

week found that fuel price volatility and inflation sit at the

top of the industry's risk agenda, pushing carriers to focus

more heavily on cost control and financial health.

"Together, they've turned what was supposed to be a record

year into a fight for margin," the survey said.

Airlines have two primary costs: fuel and labor. Sudden

increases in fuel are hard to absorb because many tickets are

sold weeks or months before travel. Longer routes also burn more

fuel and make aircraft and crews less efficient.

The challenge is how much of the latest fuel hit can be

passed on to travelers before higher fares start to weaken

demand.

FARE POWER

So far, travel demand has held up in several large markets,

especially among premium and corporate travelers, giving

carriers more room to raise fares.

In the United States, domestic published fares as of May 25

showed robust demand and successful pass-through of higher fuel

costs, with one-week-out fares up 35.8% year-on-year and

four-week-out fares up 39.4%, according to Raymond James.

"The willingness to pay over the past few years, crisis

and no crisis, from the premium side has been really strong, and

we see that strength continuing," Alexandre Lefevre, Air

Canada's ( ACDVF ) vice president of network planning and global

sales, told Reuters.

Still, there are limits. Higher fares can help airlines

recover part of their fuel bill, but they also risk pushing out

travelers with tighter budgets. That risk is greater in regions

where currencies are weak, consumer spending is under pressure

or airlines lack the pricing power of large network carriers.

Some carriers are still planning for growth. Singapore

Airlines is in talks for at least 50 large wide-body

jets, while Qantas is weighing an order for about 20

Airbus or Boeing ( BA ) wide-body aircraft, Reuters reported this week.