Dubai, United Arab Emirates. Travel shares fell on Monday as escalating conflict between the US, Israel and Iran disrupted flights globally, closed key Middle Eastern hubs and sent oil prices surging.
Airport closures strand passengers
Middle Eastern airports including Dubai, the world’s busiest international hub, and Doha closed for a third day, stranding tens of thousands of passengers in one of the sharpest aviation shocks in recent years.
Oil prices rise on attacks and shipping disruption
Oil prices jumped 7 per cent to their highest in months as Iran and Israel stepped up attacks, damaging tankers and disrupting shipments from the key producing region.
European travel and airline shares fall
Shares in TUI (TUI1n.DE), Europe’s largest travel company, dropped 7 per cent in early trade, while British Airways-owner IAG (ICAG.L) was down 9 per cent, and Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA) down 7 per cent. Hotelier Accor (ACCP.PA) and cruise company Carnival also fell sharply.
Analysts cited rising fuel costs, cancellations and rerouting expenses as the main pressure points for airlines, despite most having hedged their fuel.
“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.
Asian carriers pressured; cancellations expand
Asian airlines were also hit. Japan’s ANA Holdings (9202.T), Air China (601111.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 per cent.
Cathay Pacific, which fell as much as 7 per cent before trimming losses to 2.9 per cent, cancelled all flights to the Middle East, including passenger services to Dubai and Riyadh, until further notice. “We are waiving rebooking and rerouting charges for the affected customers,” it said.
Singapore Airlines cancelled flights to and from Dubai through March 7, while Japan Airlines suspended Tokyo-Doha flights.
“For (East) Asian carriers, the number of flights they have to the airports that have been shut are rather limited,” said Singapore-based independent aviation analyst Brendan Sobie. “But of course you have the potential impact of higher oil prices and the overall political/economic instability globally.”
How have the flight cancellations and rerouting affected your travel plans?