Middle East flights: British Airways axes services but war’s end could bring cheap fares from Gulf carriers

Travellers should expect cut-price offers on Middle East-based airlines as soon as the Iran war is over, according to the boss of Australia’s biggest travel agency.

It comes as British Airways cancels flights to and from the Middle East amid escalating tensions in the region, with fears it could trigger a domino effect for flight routes around the world.

“Due to the continuing uncertainty of the situation in the Middle East and airspace instability, we’ve had to temporarily reduce our flying schedule in the region,” British Airways said in a statement.

“We’ve cancelled all flights to and from Amman, Bahrain, Doha, Dubai and Tel Aviv until later this month and to and from Abu Dhabi until later this year.”

Extensive airspace closures have forced popular carriers such as Qatar Airways, Emirates and Etihad to grind to a halt, with Asian and US airlines emerging as the go-to choices for customers travelling to and from Europe.

As a result, flights to the UK and Europe through Asia that bypass the Middle East — like Singapore Airlines and Cathay Pacific — have jumped from about $2500 in economy to $4000 or $5000. Meanwhile, business class seats are fetching up to $17,000.

But Flight Centre managing director Graham Turner is clinging to optimism the Iran war will end sooner rather than later.

“We’re assuming that it’s not going to last too much longer and then you’ll get some very good fares through the Middle East,” Mr Turner told The West Australian.

“Emirates, Qatar and Etihad, which are great airlines, will be very keen to fill up their seats, which a lot of people would have cancelled over the next two or three weeks.”

The suspension of regular services by the three dominant Gulf carriers since the conflict began on February 28 has removed over 10 per cent of daily international flight capacity, according to global travel data provider OAG Aviation.

Mr Turner’s comments came a day after Qantas — a partner airline of British Airways through the Oneworld Alliance — announced it would hike airfares on its international routes this week as the Iran war sends oil prices swinging wildly and stokes fears of jet fuel shortages.

Qantas stressed that while it did not operate any flights to the Middle East and that services to and from Europe were operating as scheduled, volatile jet fuel prices drove the group’s costs higher.

Analysts at Citi estimate the sudden spike in fuel costs has already chewed through between $70 million and $90m from Qantas’ pre-tax profits.

Qantas shares have fallen heavily since the start of the war in the Middle East, now at $8.82, which Citi analysts say implies the disruption will last far longer than the broker’s base case assumption.

While it concedes there will be some impact to earnings from the conflict, Citi doesn’t believe it will be as bad as the market is making it out to be.

Qantas on Tuesday said the price increases would vary from route to route. It’s expected to be in the range of about 5 per cent.

The airline said its European routes — including Perth to London, Perth to Paris and services via Singapore — were more than 90 per cent full, which was about 15 percentage points higher than normal for this time of the year.

Meanwhile, airlines around Asia have also pushed up prices of fares and fuel surcharges in response to surging jet fuel costs.

These include Southeast Asia’s biggest budget carrier AirAsia and Hong Kong Airlines, which will hike fuel charges on a range of routes, including a 35 per cent increase, or $HK100 ($17.84), to the Maldives, Nepal and Bangladesh.

Air India and Air India Express will phase in fuel surcharges across domestic and international routes, also from Thursday.

Cathay Pacific says it expects to increase passenger capacity by around 10 per cent as it adds more frequent flights and destinations to its network amid the conflict.

Last week, the boss of American carrier United Airlines told CNBC the number of customers from Australia and New Zealand travelling to Europe through the US had jumped to more than 1000 a day.

“Last year, we booked less than one a day,” Scott Kirby said, adding that Europe is the strongest region in the world for bookings now.