Airline shares fall as US-Iran conflict disrupts travel
Airline stocks fell, with Hong Kong’s Cathay Pacific, Australia’s Qantas Airways, Singapore Airlines and Japan Airlines shedding more than 5 percent after the United States and Israel launched weekend attacks on Iran, disrupting travel and causing oil prices to rise.
The war in Iran has forced the closure of major hubs in the Middle East, including Dubai and Doha, for a third day, while global air transport remains in disarray as tens of thousands of passengers are stranded around the world.
Oil prices rose 7 percent to the highest level in months as Iran and Israel stepped up attacks in the Middle East, damaging tankers and disrupting shipments from key production regions.
Qantas’ shares fell 10.4 per cent to a 10-month low when the market opened in Australia on Monday, before paring some losses to around 6 per cent despite not flying to the Middle East and relying instead on a codeshare partnership with the Emirates of Dubai.
Shares of other Asian airlines, 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, fell at least 4 percent.
“The sharp selloff in Asian airline stocks reflects market concerns about increased costs from higher fuel costs, flight cancellations and re-routing of flights following airspace and airport closures,” said Morningstar stock analyst Nicole Lim.
He said most Asian airlines have partially hedged their exposure to fuel prices by mitigating the effects of short-term spikes, and some carriers may benefit from bookings from passengers displaced by canceled flights.
Cathay Pacific, whose shares fell as much as 7 percent, said it was canceling all its flights to the Middle East, including passenger services to Dubai and Riyadh, until further notice, as it narrowed its losses to 2.9 percent.
“We are waiving rebooking and redirection fees for affected customers,” he said.
Singapore Airlines has canceled flights to and from Dubai until March 7, while Japan Airlines has suspended its Tokyo-Doha flights for now.
“For (East) Asian carriers, the number of flights they operate to closed airports is quite limited,” said Brendan Sobie, an independent aviation analyst based in Singapore.
“But of course you have the potential impact of higher oil prices and general political/economic instability globally.”
He added that Indian carriers are particularly disadvantaged by busy Middle East flight schedules, which mostly serve migrant workers, and a ban on using Pakistani airspace, which affects flights to and from Europe.
Air India said its flights between India and Zurich, Copenhagen and Birmingham, as well as the United Arab Emirates, Saudi Arabia, Israel and Qatar, were canceled on Monday. It was added that Air India’s flights to New York and Newark will stop in Rome for refueling.
Data provider VariFlight said airlines in mainland China have so far canceled 26.5 percent of flights to and from the Middle East from March 2 to March 8.
“Overall, the model points to sharp disruption in the short term but relatively limited revisions later in the week, suggesting carriers are still wary of broader schedule resets as they monitor developments,” VariFlight said.
The ripple effects of conflict in the Middle East have impacted travelers around the world.
Dubai is the world’s busiest international airport in 2024, with 92 million passengers ahead of London Heathrow by 13 million, according to Airports Council International. Doha was the 10th busiest international airport in the world that year.
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