Governments in the Middle East arranged a limited set of repatriation flights on Wednesday to return citizens who have been stranded by widespread airspace closures, even as the U.S. and Israeli air campaign against Iran intensified. The moves came as global airline shares attempted to steady after sharp falls earlier in the week.
Airspace across much of the Middle East remained largely empty on Wednesday, with major Gulf aviation centers - including Dubai, which is normally the world’s busiest international airport - closed for a fifth consecutive day. The extended shutdown represents the most severe travel interruption in the region since the COVID-19 pandemic.
Authorities scheduled the first of the repatriation flights to the United Kingdom and France for Wednesday, and the United Arab Emirates opened special corridors to enable some of its nationals to return. These limited services stand in stark contrast to the thousands of daily departures that typically operate from the Gulf.
Many tourists and expatriates stranded in the region have sought alternative ways to leave, arranging their own travel where possible. The disruption is not limited to passenger traffic - the Gulf also serves as a major hub for air cargo, adding pressure to international trade routes.
Financial markets reflected the operational turmoil. In recent days global airline stocks plunged by double-digit percentages, erasing tens of billions of dollars in combined market capitalization. By Wednesday, some of those losses had moderated, but the sector remained under strain.
Key movers included Lufthansa, which was down 0.8%, and Qantas, which fell 2.7% on Wednesday - both carriers have already lost more than 10% of their market value this week, marking their worst weekly performance in nearly a year. BA-owner ICAG was down 1.5% on the day, having declined more than 11% over the prior three trading sessions.
Airline executives have highlighted practical obstacles to restarting normal flight schedules when airspace reopens. Crews and pilots are scattered in different locations around the world, complicating logistics for airlines that will need to assemble personnel before resuming routes. At the same time, rising oil prices will increase carriers’ fuel bills, further squeezing airline operating costs.
Natixis, in a research note, warned that if extended airspace closures become the norm, Asia-Europe routes will likely see higher operating costs as flights are forced to reroute. The bank also noted that reduced travel options would likely lower spending by affluent Middle Eastern tourists in Asia.
Asian carrier stocks largely pared earlier losses. Korean Air Lines shares were down 7.9% on Wednesday after a 10.3% drop on Tuesday. Japan Airlines declined 2.9% on Wednesday following a 6.4% fall on Tuesday. Major Chinese carriers, including Air China and China Southern Airlines, closed the day down between 1% and 3%.
Natixis senior economist Gary Ng observed that Asian markets were reacting at a different pace, noting that many European airlines had already factored in the impact of the conflict. He said that as markets price in the possibility of a longer-lasting conflict, with the potential for higher energy prices and weaker regional currencies, the effect spreads across the entire airline sector including carriers in the Asia-Pacific region.
South Korea’s stock market closure on Monday meant that many of its airline and travel stocks did not trade at the time when the initial market impact from the conflict was felt, shifting some of the timing of losses for APAC carriers.
Overall, while some stabilization in equity markets was visible on Wednesday, the operational and cost pressures facing airlines remained acute. The limited repatriation flights and special corridors ease some humanitarian pressures but leave the broader disruption to passenger and cargo aviation unresolved until airspace restrictions are lifted and crews can be reassembled.