The ongoing conflict involving Iran has added a new pain point for travellers: surging airfares, driven by a sudden drop in airline capacity on key global routes and rising fuel costs.
More than 46,000 flights have been cancelled across the region since the conflict began on 28 February, according to aviation data firm Cirium. At its peak earlier this month, the disruption wiped out around 10% of global airline capacity, marking the biggest aviation shock since the Covid-19 pandemic.
Airlines are already responding with fare hikes and operational cuts.
Air New Zealand raised prices on 10 March. Two days later it announced the cancellation of 1,100 flights (5%) over the next two months, affecting 44,000 passengers who are mostly on domestic routes. Replacement flights will be offered, although affected passengers can opt for refunds.
Thai Airways will raise prices by up to 15%, which may go higher if prices continue to climb.
Cathay Pacific will double its passenger fuel surcharge from 18 March. Meanwhile, Hong Kong Airlines has one of the steepest airfare hikes at up to 35.2%.
Qantas Airways would hike their fares for international routes for the week ending 15 March, subject to further announcements.
Malaysia Airlines will also be increasing ticket prices. While Singapore Airlines and Scoot has not imposed fuel surcharges on flights, the price of a one-way Heathrow-Singapore economy ticket cost S$10,900 – 900% more than fares later in March.
A select few carriers, including Lufthansa and Air France, which purchased jet fuel at a fixed price in advance, have thus far not announced ticket changes.
Meanwhile, many airlines have suspended flights to the Middle East until the end of March, offering affected passengers full refunds or rebooking options.
Demand for Europe affected
The conflict is also hitting tourism demand.
The war has already cost the Middle East at least US$600 million per day in international visitor spending, according to estimates from the World Travel & Tourism Council (WTTC).
The Middle East plays a vital role in global travel with the region accounting for 5% of global international arrivals and 14% of global international transit traffic.
Dato’ Sri Koh Yock Heng, co-founder and group managing director of Apple Vacations, said travellers are likely to delay bookings for Europe and the Middle East over the next six months as airfares surge – “unless there is a peaceful settlement”.
Ong Hanjie, director of EU Holidays, shared that the effects from the affected aviation sector have already impacted at least 60% of outgoing Europe tours for the Singapore-based travel agency.
There remains a bright spot. WTTC said that “travel and tourism is the most resilient of sectors,” pointing to its analysis of previous crises.
“Security-related incidents often see the fastest tourism recovery times, in some cases as quickly as two months, when governments and industry work together to restore traveller confidence,” said Gloria Guevara, president and CEO, WTTC.