Travel shares tumbled today as escalating conflict between the US, Israel and Iran disrupted flights worldwide, forced the closure of key Middle Eastern hubs and sent oil prices surging, with analysts warning of weeks of disruption.
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 today became the latest country in the region to partially close its airspace.
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.
Shares in TUI, Europe's largest travel company, were down 8.5% in late morning trade, while Lufthansa was down 6.5% and Aer Lingus and British Airways-owner IAG down 4.8%. Hotelier Accor and cruise company Carnival also fell sharply.
US airline shares dropped around 5% in pre-market trade.
"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," said B Riley Securities in a note.
Analysts highlighted rising fuel costs, cancellations and rerouting expenses as the main pressure points for airlines, despite hedging. JP Morgan, Goodbody and Citi pointed to Wizz Air 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, said was a "nightmare scenario", with airlines not knowing when swaths of Middle Eastern airspace would reopen.
Middle Eastern carriers continued to cancel flights today. Flydubai suspended all flights to and from Dubai until tomorrow evening.
Asian airline stocks were also hit. Japan's ANA Holdings, Air China, China Southern, China Eastern Airlines, Malaysia's AirAsia and Taiwan's China Airlines and EVA Airways all fell at least 4%. Cathay Pacific cancelled all flights to the Middle East, including to Dubai and Riyadh, and waived rebooking fees.
Singapore Airlines cancelled flights to and from Dubai until March 7, while Japan Airlines suspended Tokyo-Doha services.
Singapore-based independent aviation analyst Brendan Sobie said Indian carriers were particularly exposed due to heavy Middle Eastern schedules serving migrant workers and a ban on using Pakistan's airspace on flights to and from Europe.
Air India cancelled flights between India and Zurich, Copenhagen, Birmingham, the UAE, Saudi Arabia, Israel and Qatar and said services to New York and Newark would refuel in Rome.
Data provider VariFlight said mainland Chinese airlines had cancelled 26.5% of flights to and from the Middle East from March 2 to March 8, pointing to "sharp near-term disruption" but a wait-and-see stance on potential longer-term schedule changes.
The ripple effects have hit travellers worldwide. Dubai was the world's busiest international airport in 2024 with 92 million passengers, according to Airports Council International, ahead of London's Heathrow by 13 million. Doha ranked 10th.
Virgin Australia, which leases planes operated by partner Qatar Airways for flights to Doha, cancelled eight flights today and offered free booking changes.
Lufthansa cancelled passenger flights in and out of the UAE, but sought to fly an Airbus jet out of Dubai to Munich without passengers.
Qatar Airways passengers in Sydney told Reuters they scrambled to rearrange travel with little information.
