Airline Groundings Reveal Global Travel’s Gulf Dependence

The Resumption of Gulf Air Travel Amid Ongoing Tensions

After a week of uncertainty, airspace closures, and limited flights, the global aviation community was relieved to hear that Emirates, a major Gulf-based carrier, has resumed operations in earnest. This development is particularly significant given the ongoing conflict between the US and Israel against Iran. The airline’s return to service has brought hope to passengers worldwide, especially those in the UK who had struggled with delayed rescue flights from neighboring Oman.

Emirates plans to reintroduce 11 daily flights to five British airports by Saturday. The airline will also operate at 60% of its full network, covering 83 destinations, including seven US airports and 22 daily flights to India. Despite this partial return, concerns remain about the future of global air travel as many question where the world will fly now.

The Role of Gulf Hubs in Global Aviation

Before the recent crisis, the three major Gulf hubs—Dubai (home to Emirates), Abu Dhabi (Etihad), and Doha (Qatar Airways)—had become the crossroads of global aviation. Their networks connect Asia, Africa, Europe, and reach out to the Americas and Oceania. Nearly 300,000 people pass through these hubs every day, with two-thirds heading directly on connecting flights. The closure of Russian and Ukrainian airspace after the invasion of Ukraine pushed eastbound traffic south into a smaller, uncertain corridor. For many routes, a Gulf connection became the cheapest, quickest, and possibly the most comfortable way to fly.

When the US-Israeli bombing of Iran began a week ago, followed by retaliatory rockets and drones closing Gulf airports, the aviation traffic jam rippled across continents. Those stranded included British tourists stuck in Thai hotels and others struggling to reach Europe from Australia. Many of these travelers were only passing through, bewildered to find a one-hour transfer turned into a lounge-side seat in a developing war.

Impact on Passengers and Airlines

The sheer volume of traffic meant that even a few days’ backlog left governments praying for a resumption of Gulf carrier operations as the only feasible way to get citizens home. With only a partial closure of UAE airspace, Etihad restarted limited services primarily for repatriation, while Qatar’s airspace remains fully closed.

According to aviation analyst John Grant, on a normal day, about 70% of Abu Dhabi’s Zayed airport’s 55,000 passengers are transiting. A far greater proportion of Dubai’s 175,000 passengers, 55%, remain in a city where tourism has boomed.

“The longer it goes, the more people’s travel expectations are going to be changed,” says aviation analyst Andrew Charlton. “Passengers are going to have to find other ways to get around, and destination selections are going to be changed.”

Economic and Tourism Impacts

The tourist hit to the region could be significant: Oxford Economics estimates that a short conflict could mean a drop of 11% in visitors to the Middle East this year, with a $34bn (£25bn) loss in spending. However, the choice for many who transit may not be simple: on routes from Australia to the UK, for example, the number of flights that go via those hubs far outweighs the rival options from airlines such as Thai, Cathay Pacific, or Singapore.

Two-thirds of the world’s population is within an eight-hour flight of the Gulf, and geography has underpinned the travel hub’s success. Longer flights are available, and Qantas may further its Project Sunrise ambitions of direct Sydney-London flights if the Gulf is out of action for longer. But the ratio of fuel burned simply to carry its own weight becomes increasingly inefficient beyond the 3,000-4,000 miles of a UK-Gulf connection.

The Rise of Gulf Airlines

The Middle East airlines have been an integral part of the growth of petrostate capitals into big international players, across politics, sport, and aviation. Sovereign wealth billions spent on the rebranding of football stadiums and strips with airline logos, and on mega-orders for the very biggest, newest, fuel-efficient, and most luxurious planes.

Breakthroughs in aircraft design, the twin-engine 777 long before the 380, coincided with the appetite for growth, as Gulf aviation rapidly built up new airport hubs and fleets, without some of the planning restrictions or employment rights required elsewhere. The former Qatar Airways chief executive Akbar Al Baker notoriously contrasted his young cabin crew, who were housed under strict conditions in Doha blocks, with US airlines’ “grandmothers.”

Future Challenges and Opportunities

The grounding of planes during the pandemic may provide faith that growth will persist beyond current difficulties. In perhaps a subconscious echo of the looming conflict, the president of Emirates, Tim Clark, commented at a governmental summit in Dubai last month that in five years since the pandemic, “our profits have gone up – almost nuclear.”

While the US ostensible aim of the conflict is to curb the atomic ambitions of Tehran, plenty of Americans would not worry about denting the businesses of Iran’s neighbors; big airlines long lobbied the White House to stop the Gulf carriers flying into the US.

However, the ramifications could go a lot further, with all aviation vulnerable to the current oil price shock caused by the halt in shipping through the Strait of Hormuz, which is responsible for 20% of the world’s flows.

Economic and Operational Risks

The cost of a barrel of Brent crude soared past $90 on Friday, up from about $72.50 before the war. Russia’s invasion of Ukraine in 2022 sent the price of jet fuel beyond the dizzying peaks of 2008; the spikes now occurring in Asian markets suggest a prolonged war will push kerosene to record highs.

At British Airways’ owner, IAG, fuel last year accounted for about 25% of its costs, just over €7bn (£6.1bn). While it has hedged 40% of its jet fuel bill for next year – buying in advance at an agreed price – other airlines’ profits are even more exposed.

Credit ratings agencies are ready to downgrade a host of airlines if hostilities continue and the oil prices remain high. Rachel Gerrish, a credit analyst at S&P Global Ratings, says the agencies would be watching “how rising fuel prices, operational disruptions, and shifts in consumer demand develop.”

For travelers, it could mean higher fares – hedged or not. Garrish says that S&P’s rated airlines including BA, easyJet, and Ryanair “typically have a good track record of passing on elevated fuel prices to customers.” A loss of Middle East capacity will almost certainly drive up long-haul fares, as demand outstrips supply.

Should UAE flights falter and aviation’s Gulf crossroads be blocked again, Istanbul could be a big winner, and other airlines may provide some alternatives, says Charlton. “Most European carriers had abandoned ship on routes to Asia. The question is how quickly can they react? And African carriers like Ethiopian and Kenyans, if traffic goes north-south, could be back in the game.”

He suspects, however, not for long: “The old-time airline guy in me says, Emirates will get their traffic back. They’ll offer cheap tickets, and it’s never failed in the past – it got everyone back to flying after the pandemic. Then they ramped up the ticket prices, and we still travelled.”