Four decades ago, in the middle of a different war in the Persian Gulf, the rulers of Dubai started Emirates, an airline that would defy the odds and become one of the world’s largest and most profitable carriers.
Now, it and other airlines in the region are facing their biggest test since the Covid-19 pandemic. The war in Iran has forced these companies to cancel tens of thousands of flights, tearing up the travel plans of millions of people, many of them intending to continue on to other destinations. The big questions now are how well Emirates and other Persian Gulf airlines are managing the fallout and how long will it take them to recover.
“We’ve got some major hubs out there for airlines, and they have built themselves into an indispensable force for connecting passengers,” said Mike Malik, the chief industry officer at Cirium, an aviation data firm. “But when something like this happens, those hubs get shut down and you basically break the system.”
Geography has been central to the success of the three big Persian Gulf airlines — Emirates, Qatar Airways and Etihad Airways. Much of the world’s population lives within reasonable flying distance of the airlines’ home bases in Dubai, Doha and Abu Dhabi, making them natural transit hubs for people travelling long distances like New York to New Delhi or London to Sydney, Australia.
But the three carriers also had access to their governments’ deep pockets and hired savvy executives from all over the world. That perhaps explains why other airlines in the region, which have the same geographic advantages, have not done as well.
The airlines have an especially tight grip on travel to and from Europe, according to Cirium. They carry about one in three people travelling from Europe to Asia and one in two people from Europe to Australia and other destinations in the Southern Pacific Ocean region. All told, 227 million people flew to, from or through the region last year, according to the International Air Transport Association.
But the war has paralysed that traffic. More than 52,000 flights to and from West Asia — more than half of all flights planned in the region — have been cancelled since the war began on February 28, according to Cirium. An estimated six million passengers have been affected.
The costs are adding up, too. Crews and planes for West Asian carriers were displaced. And tourism to the region has effectively ground to a halt.
“You’ve still got the costs of your aircraft, the cost of your staff, maintenance, head office, admin,” said John Strickland, an aviation industry consultant.
The financial toll could be substantial. The loss of tourist spending alone could range from $34 billion to $56 billion this year, depending on how long the war lasts and how much it scares off travellers, according to an analysis by the research firm Tourism Economics. Given the current state of the war, experts at the firm expect the toll to come in at the high end of that range.
And the effects could extend far beyond the region to countries that have become reliant on flights that connect through the Persian Gulf, like India and Australia.
“Safe to say that there’s hundreds of destinations out there that are significantly impacted by various degrees,” said Brendan Sobie, an industry analyst who runs his own research and consulting firm based in Singapore.
Many travellers affected by the airspace closures in West Asia said the airlines had done their best in a difficult situation, but others said they had received conflicting information or little help. American travellers have also expressed frustration with the state department for not helping them return home.
All three of the big Gulf airlines have a lot to lose if customers feel the companies stranded them. The carriers, all government-owned, have posted robust profits in recent years and have established reputations for providing good service, industry analysts said.
These big carriers also have significant cash reserves, which should help them recover relatively quickly, analysts said. Smaller carriers and budget airlines may struggle more.
New York Times News Service