Airline Shares Rebound as Flights Resume in the Middle East

In the midst of escalating tensions between the United States and Iran, airline shares have seen a rebound as more flights take off from the Middle East. This comes as a relief for carriers, who saw billions of dollars wiped off their market value earlier in the week following US-Israeli strikes on Iran.

Governments have been working to arrange flights out of the region for tens of thousands of stranded citizens. The closure of most of the Middle East’s airspace due to the risk of missiles hitting planes has caused major disruptions in air travel.

Shares in Hong Kong’s Cathay Pacific Airways saw a 2. 2% increase, while Qantas Airways rose 1% and Korean Air Lines jumped 5. 6%. Japan Airlines, on the other hand, closed down 1%, reducing the losses it had seen earlier in the week.

Chinese carriers such as Air China, China Eastern Airlines, and China Southern Airlines also saw a decline in both Hong Kong and Shanghai, ranging from 1% to 4%. However, they have since stabilized.

According to Gary Ng, a senior economist at Natixis, Asian airlines are highly sensitive to the situation in Iran due to their exposure through routes and energy, which affects both revenue and costs. Any developments that shorten the duration of the conflict can easily shift sentiment.

The closure of Dubai, the world’s busiest international airport, has led to a surge in ticket prices on popular routes such as Australia to Europe. However, Emirates and Etihad Airways have resumed a limited number of services from Dubai and Abu Dhabi through safe air corridors.

Qatar Airways has announced that it will be operating limited relief flights from Thursday for stranded passengers departing from Muscat to six European destinations, including London, Berlin, and Rome. Flights from Riyadh to Frankfurt will also resume. These flights will be the airline’s first since its Doha hub was shut down on Saturday following the strikes on Iran, according to flight-tracking service Flightradar24.

By Thursday morning, Emirates flights had departed from Dubai to destinations such as Sydney, Hong Kong, Paris, Amsterdam, Toronto, and Mumbai. However, the majority of services remain cancelled. The number of take-offs and landings at Dubai airport on Wednesday nearly doubled compared to the previous day, with a total of 161, according to Flightradar24.

The US State Department has announced that a government charter flight is bringing Americans home from the Middle East, and additional flights are being arranged from other regional locations. Since February 28, over 17,500 Americans have returned to the United States from the Middle East.

Canada is also working to repatriate stranded citizens on commercial flights and charter flights. In addition to disrupting travel, the conflict has also reduced the world’s air cargo capacity by over 20% and driven up freight rates.

Despite the soaring jet fuel prices, many Asian airline shares have rebounded from their double-digit percentage drops in