Summary: Airline equities gained ground on Thursday after some flights resumed from the Middle East, offering a temporary respite to carriers that suffered heavy market-value losses earlier in the week following U.S.-Israeli strikes on Iran. Despite a small number of services restarting, most routes remain cancelled and airspace restrictions continue to complicate operations, repatriations and routing decisions.
Governments have been mobilising flights and commercial seats to evacuate tens of thousands of citizens left stranded by the intensifying conflict between U.S.-Israeli forces and Iran. Much of the region’s airspace has been shut to commercial traffic because of the heightened risk that passenger aircraft could be struck by missiles, forcing a wide range of operational and logistical responses.
Dubai - normally the world’s busiest international hub handling in excess of 1,000 daily flights - has seen its operations severely disrupted. The airport closure upended travel plans and triggered a sharp rise in ticket prices on heavily trafficked corridors such as Australia-to-Europe routes.
Emirates and Etihad Airways have begun operating a limited number of flights out of Dubai and Abu Dhabi using the United Arab Emirates’ designated safe air corridors, while Qatar Airways’ services from Doha remain fully suspended.
Flight-tracking service Flightradar24 reported that, as of early Thursday morning, Emirates-operated aircraft had departed Dubai for several destinations including Sydney, Amsterdam, Toronto and Mumbai, though the bulk of scheduled services were still showing as cancelled.
Authorities said three commercial flights were scheduled to leave the United Arab Emirates bound for Australia on Thursday. Earlier, about 200 Australians arrived on an Emirates flight from Dubai on Wednesday night, scenes at arrival gates were emotional as families reunited with returning travellers.
The U.S. State Department said a U.S. government-chartered aircraft was en route to bring Americans home from the Middle East, and that additional flights were being arranged across the region. Canada said it was securing commercial seats and contracting charter flights to repatriate citizens displaced by the airspace closures.
Air India announced it had a flight planned for Thursday operating the Mumbai-Dubai-Delhi routing on a Boeing 777 with higher seating capacity to return stranded passengers who had been unable to leave the region.
Market reaction
Asian airline shares reversed some of the heavy losses recorded earlier in the week. In Hong Kong, Cathay Pacific Airways shares rose 4.2%. Japan Airlines traded up 0.25%, Qantas Airways increased by more than 1%, and Korean Air Lines advanced by over 5%.
Major Chinese carriers, including Air China, China Eastern Airlines and China Southern Airlines, recorded declines in the 1%-3% range across Hong Kong and Shanghai listings, after having suffered steeper falls earlier in the week before stabilising.
Kenny Ng, a securities strategist at China Everbright Securities International, described the rebound as likely short-lived, noting its durability would hinge on developments in the Iranian conflict: "For now, I consider this rebound to be primarily short-term in nature, and its sustainability will still depend on the ongoing situation in the Iranian conflict."
Potentially easing tensions, operatives from Iran’s Ministry of Intelligence have indicated a willingness to engage with the U.S. Central Intelligence Agency in talks aimed at ending the war, the New York Times reported, citing officials briefed on the matter.
Gary Ng, a senior economist at Natixis, highlighted the sensitivity of Asian carriers to the situation in Iran because of effects on both route exposure and energy costs: "Asian airlines are highly sensitive to Iran’s situation due to exposure through routes and energy in both revenue and costs. Any news on shortening the duration of the war can easily turn sentiment."
Operational strain and passenger movements
With large swathes of Middle Eastern airspace closed, airlines have been forced to reroute flights through longer corridors, carry additional fuel or schedule extra refuelling stops to protect against sudden diversions. Those measures add time and cost to operations and complicate scheduling during an already turbulent period.
Some stranded tourists and expatriates have sought alternative exit routes through Saudi Arabia or Oman, where airspace remains open, attempting to reach regions from which onward travel is possible.
"Airlines and governments are juggling repatriation logistics alongside the operational constraints imposed by closed airspace," said one market commentator summarising the current dynamics.
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Conclusion
Partial flight resumptions from Gulf hubs have provided some relief to carriers and their investors, but most services remain suspended and significant operational and geopolitical uncertainties persist. Market sentiment appears to be responsive to any indication of a shortening of the conflict, while airlines continue to contend with constrained airspace, rerouting costs and the logistical demands of large-scale repatriation efforts.