Airlines in Asia, such as Singapore Airlines and Cathay Pacific Airways are currently among the airlines best positioned to handle the disruption caused by the war in the Middle East. Travellers trying to leave the region are scrambling for flights and are paying extremely high prices to secure seats.
The situation followed the United States and Israeli strike on Iran, which triggered major disruptions to air travel in the region. Because of extensive airspace closures, several major Gulf airlines such as Emirates and Qatar Airways have almost come to a halt. This has created opportunities for other airlines that are able to fly directly between Europe and Asia without passing through restricted airspace.
Passengers in major European airports have been paying huge amounts just to secure a seat to Asia. For example, a one way economy ticket with Singapore Airlines from London Heathrow to Singapore on March 5 was priced at HK$66,767, which is about S$10,900. This represents a 900 per cent increase compared to prices later in the same month.
Flights from Heathrow to Hong Kong have also seen a major increase. Tickets were priced at HK$26,737, while similar flights a few weeks later cost only around HK$5,670.
However, it is still unclear how long these extremely high fares will last. Higher ticket prices are also helping airlines absorb rising oil prices that have come with the ongoing conflict.
Flight disruptions across the Middle East
The war has caused widespread airspace closures across several countries in the Gulf region. Airspace in Qatar, Iran and Iraq remains closed to regular air traffic. Because of this, many flights cannot operate as usual.
According to aviation consultancy OAG Aviation, the suspension of regular services by major Gulf carriers, including Emirates, Qatar Airways and Etihad Airways since February 28 has removed more than 10 per cent of daily international flight capacity measured in available seat kilometres.
Data from Cirium also showed that more than 23,000 flights had been cancelled through March 5. While some evacuation flights from the United Arab Emirates have been allowed, most commercial air traffic across the Gulf remains heavily restricted.
Major airports in the Middle East such as Dubai, Abu Dhabi and Doha normally serve as important stopover hubs for long-haul flights between Europe and Asia. Data from Roland Berger shows that airports in the Gulf handle about one third of the 125 million travellers who fly between the two regions each year.
The disruptions have also affected aviation stocks. While the major Middle Eastern airlines are not publicly listed, several European airline companies saw their share prices fall. The parent company of British Airways, International Airlines Group, dropped almost nine per cent. Deutsche Lufthansa fell 7.7 per cent, while Air France-KLM dropped 15 per cent.
Meanwhile, airlines in Asia saw smaller declines. Singapore Airlines fell less than seven per cent and Cathay Pacific Airways dropped around 5.5 per cent.
Some travellers reconsider travel routes
Some travellers are now rethinking how they travel between Europe and Asia.
A 28-year-old registered nurse named Aiden McAleenan had originally planned to relocate from Britain to Melbourne. His travel plans were disrupted after Qatar Airways cancelled his flight on March 3.
He later managed to rebook another flight on March 4 with a stopover in Kuala Lumpur instead.
“The stopovers in Asia do look more interesting. In future, I would look at the big hubs in Asia for peace of mind or not being stranded at the airport,” he said.
Industry experts say the current situation may bring short term gains to Asian airlines.
Mr Linus Benjamin Bauer, founder of aviation advisory firm BAA & Partners, said: “Asian airlines may see a short term combination of higher fares, stronger cargo yields and modest market share gains.”
“But this is fundamentally a redistribution of traffic, not a structural rebalancing of global aviation networks,” he added.
Mr Subhas Menon, director general of the Association of Asia Pacific Airlines, also commented on the situation.
“The security situation counts for a lot,” he said. “Clearly the Middle East airlines are under pressure. They definitely will be quite badly affected if this situation is prolonged, while Asian carriers do not have a security situation so their hubs are in a good place.”
Analysts from DBS Bank also noted that once airspace reopens and the security situation improves, travel demand could shift back.
“Drawing on recent incidents, airspace closures following previous attacks did not meaningfully translate to a shift away from the affected country once operations normalised,” analysts Tabitha Foo and Jason Sum said.
“While the scale of the current closures is broader and potentially more disruptive, history suggests that traffic flows tend to revert once airspace reopens.”
