Airline shares experienced a significant decline on Monday following the U.S. and Israel’s weekend strikes on Iran, which led to disruptions in travel and a surge in oil prices. Hong Kong’s Cathay Pacific and Australia’s Qantas Airways saw their stocks drop by more than 5%, while European airline stocks were also projected to fall. Shares in Lufthansa and TUI were indicated to open nearly 12% lower.
The global air travel industry faced turmoil as the conflict resulted in the closure of key Middle Eastern hubs such as Dubai and Doha for the third consecutive day, leaving tens of thousands of passengers stranded worldwide.
Oil prices jumped 7% to their highest levels in months as tensions between Iran and Israel escalated in the Middle East, affecting tanker operations and disrupting shipments from this crucial oil-producing region.
Qantas shares dropped 10.4% to their lowest point in 10 months when the market opened in Australia but later recovered slightly to trade down about 6%. This decline occurred despite Qantas not flying to the Middle East, as it relies on a codeshare partnership with Dubai’s Emirates.
Other Asian airline stocks, including Japan’s ANA Holdings, Air China, China Southern Airlines, China Eastern Airlines, Malaysia’s AirAsia X, and Taiwan’s China Airlines and EVA Airways, each fell by at least 4%.
Morningstar equity analyst Nicole Lim commented, “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.” However, she noted that most Asian airlines have partially hedged their fuel price exposure, which could cushion the impact of short-term spikes. Some carriers might even benefit from bookings by travelers displaced by canceled flights.
Cathay Pacific, which saw its shares decline as much as 7% before recovering to a 2.9% drop, announced it had canceled all flights to the Middle East, including services to Dubai and Riyadh, until further notice. “We are waiving rebooking and rerouting charges for the affected customers,” the airline stated.
Singapore Airlines canceled flights to and from Dubai through March 7, while Japan Airlines suspended its Tokyo-Doha flights for the time being.
Brendan Sobie, a Singapore-based independent aviation analyst, remarked, “For East Asian carriers, the number of flights they have to the airports that have been shut are rather limited. But of course, you have the potential impact of higher oil prices and the overall political/economic instability globally.” He also highlighted that Indian carriers were particularly disadvantaged due to their heavy Middle Eastern flight schedules, catering mostly to migrant workers, and a ban on using Pakistan’s airspace affecting their flights to and from Europe.
Air India announced the cancellation of its flights between India and Zurich, Copenhagen, and Birmingham on Monday, along with flights to the United Arab Emirates, Saudi Arabia, Israel, and Qatar. The airline added that its flights to New York and Newark would include a refueling stop in Rome.
Data provider VariFlight reported that airlines in mainland China had canceled 26.5% of flights to and from the Middle East from March 2 to March 8. “Overall, the pattern points to sharp near-term disruption but relatively limited revisions further out in the week, suggesting carriers are still holding back from broader schedule resets while monitoring developments,” VariFlight noted.
The conflict’s ripple effects have impacted travelers globally. Dubai, the world’s busiest international airport in 2024, had 92 million travelers, surpassing London’s Heathrow by 13 million. Doha ranked as the 10th busiest international airport that year.
Virgin Australia, which leases planes operated by partner Qatar Airways for flights to Doha, canceled eight flights on Monday and offered free booking changes. At Sydney Airport, Qatar Airways passengers expressed frustration over the lack of guidance. Italian travelers Ascanio and Alessandra Giorgetti found an alternate route home via Los Angeles after their flight to Milan was canceled without explanation. “We have no information at all, no answer on the phone from Qatar Airways,” Alessandra Giorgetti said, adding that their flights had cost 4,000 euros ($4,708.40).
Jenni and Doug Stewart, both 78, experienced a disrupted journey from Sydney to Scotland via Doha when their flight turned back halfway to Doha. “We were told the airspace had closed and we were going back to Sydney,” Jenni Stewart recounted. “Suddenly we veered towards Perth, and we didn’t know why, and then it changed again and went to Melbourne.” They eventually returned to Sydney on a separate flight and sought information amid the chaos. “It was chaotic in Melbourne, hundreds of people looking for even the vaguest of information,” Doug Stewart remarked.
