On Saturday, 28th February, the United States and Israel jointly launched coordinated strikes on Iran, including sites in and around its capital Tehran.
Since then, Iran has retaliated with air and missile strikes throughout the Middle East, affecting its neighbours Qatar, Saudi Arabia, Bahrain, Kuwait, and the United Arab Emirates.
As a result, thousands of airline passengers flying in or out of the Middle East have either been stranded at their airports of origin or needed to rethink and recalibrate their travel plans.
Current events thus pose this question: depending on how long combatants are going to string the situation out, how will it affect global aviation?
The bottom line has already been hit in Asia
Given how Asians make up around 84 to 90 percent of the total workforce in the Middle East, it isn’t surprising that most of the region’s major carriers have long-standing routes to the region.
However, since the attacks began over the weekend, share prices for Asia’s leading airlines are taking a nosedive.
To go by a report published by Channel News Asia yesterday, 2nd March, share prices for Hong Kong's Cathay Pacific, Australia's Qantas Airways, Singapore Airlines, and Japan Airlines have dropped by over five percent following the airstrikes which had the double-consequence of disrupting flights and driving up fuel prices globally.
Qantas has been hit the hardest so far as its price per share fell by 10.4 percent, its lowest in ten months, as trading began for the week in Australia.
Interestingly, Qantas does not have direct routes to the Middle East, relying instead on a codeshare partnership with Emirates.
Across Asia, share prices for regional carriers have all fallen, registering a minimum drop of around four to five percent each.
Hong Kong carrier Cathay Pacific, however, has reported a drop of as much as seven percent as trading began yesterday.
According to Nicole Lim, an analyst for institutional equity research firm Morningstar: “The sharp sell-off in Asian airline shares reflects market concerns over higher fuel costs, flight cancellations, and incremental costs from rerouting flights following airspace and airport closures."
How bad can things possibly get?
According to a report published by Egypt’s Ahram Online on Sunday, 1st March, the global commercial aviation sector stands to lose over US$1 billion thanks to the current conflict.
Experts estimate that even the suspension of a single day in operations in key locations like Dubai could lead to a loss of up to US$215 million in revenues, driven by grounded flights, suspension of cargo ferrying, and even airport retail coming to a standstill.
Consider this: Indian airlines cancelled 410 flights as attacks began on the 28th, then an additional 444 on the following day.
Carriers for gulf and North African nations have since suspended operations, halting a number of key regional links until further notice, raising serious concerns regarding global connectivity.
Also, the continued closure of the Middle East’s largest aviation hubs can only mean a system-wide disruption of services that will be felt throughout the world in the coming days.
Indeed, to quote a recent opinion from Atmosphere Research Group president Henry Harteveldt: “The temporary closing of major airline hubs in Qatar and UAE will be felt across all six populated continents. Etihad, Emirates, and Qatar Airways connect their home hub airports with hundreds of destinations around the world. The suspension of airline service at Abu Dhabi, Doha, and Dubai will not only disrupt travel to and from those cities, but will make it difficult for people in North America to travel to and from the Indian subcontinent, Africa, and Asia/Pacific. It will also disrupt travel for people living in those regions to Europe and the Americas.”
For now, even experts feel that it is too early to determine how much better or worse things could get and, like the rest of the world, are keeping an eye on events to see how the overall situation will play out.
