Dubai, United Arab Emirates. Travel shares tumbled on Monday as escalating conflict between the U.S., Israel and Iran disrupted flights worldwide, forced the closure of key Middle Eastern hubs and sent oil prices surging. Analysts warned the disruption could last for weeks.
Key hubs shut and airspace restrictions expand
Dubai, the world’s busiest international hub, and Doha remained shut for a third day, leaving tens of thousands of passengers stranded as aviation faced its biggest challenge since the COVID pandemic. Jordan on Monday became the latest country in the region to partially close its airspace.
Oil prices rise and airlines face cost pressures
Oil prices jumped 7% to their highest in months as Iran and Israel stepped up attacks, raising the prospect of higher fuel costs for airlines. Analysts highlighted rising fuel costs, cancellations and rerouting expenses as the main pressure points for airlines, despite hedging.
European and U.S. travel shares fall
Shares in TUI TUI1n.DE, Europe’s largest travel company, were down 8.5% at 1039 GMT, while Lufthansa LHAG.DE was down 6.5% and British Airways-owner IAG ICAG.L down 4.8%. Hotelier Accor ACCP.PA and cruise company Carnival also fell sharply. U.S. airline shares dropped around 5% in pre-market trade.
Analysts assess exposure and disruption risks
“We believe that an active war zone, along with the resulting flight disruptions (due to closure of airspace and airports), is likely to curb travel appetite in the region,” B Riley Securities said in a note. J.P. Morgan, Goodbody and Citi pointed to Wizz Air WIZZ.L as the most exposed European carrier because of its large presence in Israel.
Aircraft and crew were scattered around the world in the wrong places in what Paul Charles, head of travel consultancy PC Agency, described as a “nightmare scenario,” with airlines not knowing when swaths of Middle Eastern airspace would reopen.
Flight cancellations continue across regions
Middle Eastern carriers continued to cancel flights on Monday. Flydubai suspended all flights to and from Dubai until 3 p.m. (1100 GMT) on Tuesday.
Asian airline stocks were also hit. Japan’s ANA Holdings 9202.T, Air China 0753.HK601111.SS, China Southern Airlines 600029.SS, China Eastern Airlines 600115.SS, Malaysia’s AirAsia X AIRX.KL and Taiwan’s China Airlines 2610.TW and EVA Airways 2618.TW all fell at least 4%. Cathay Pacific 0293.HK cancelled all flights to the Middle East, including to Dubai and Riyadh, and waived rebooking fees.
How will ongoing airspace closures affect your upcoming travel plans?
