Airlines are feeling the effects of the Israel-Hamas war
An Etihad Airways Boeing 787-9 “Dreamliner” plane displays Israeli and Emirati flags after landing in the United Arab Emirates (UAE) at Israel’s Ben Gurion Airport near Tel Aviv, on the the company’s first scheduled commercial flight from Abu Dhabi, on April 6, 2021.
JACK GUEZ | AFP| Getty Images
DUBAI, United Arab Emirates – Airlines have seen a drop in booking numbers in the weeks following the start of Israel’s war against Hamas in the Gaza Strip, and some expect it to cut into their future profits.
According to travel analytics firm ForwardKeys, international airfares were 20% below 2019 levels in the three weeks following an attack by the Palestinian militant group Hamas against Israel on October 7, and 5 percentage points below the a period of three weeks before the attack.
The terror attack killed around 1,200 people and saw around 240 others taken hostage, prompting the most ferocious Israeli response the region has ever seen. Israel’s aerial bombing campaign and subsequent ground offensive in Gaza have killed more than 11,000 people, according to health authorities there.
In the days following the attack, major airlines canceled or reduced flights to Israel’s Ben Gurion Airport in Tel Aviv. But air travel demand to and from other countries and regions was also significantly affected.
In the three weeks to October 7, ticket issuance from the Middle East was just 3% below 2019 levels, according to ForwardKeys data, reflecting the region’s steady recovery from the Covid-19 pandemic. In the three weeks after October 7, in contrast, ticket issuance from the Middle East was 12% below 2019 levels, marking a difference of 9 percentage points.
But the biggest fall in terms of international departures was in the issuance of airline tickets from America, which was actually up 6% from 2019 levels in the three weeks before the attack, and fell to 4% below the those levels in the following three weeks, in total. a drop of 10 percentage points.
At the same time international arrivals to the Middle East decreased by 26 percentage points in that period, with the largest numbers by country of Israel, followed by Saudi Arabia, Jordan and Lebanon. ForwardKeys pulls its data from the International Air Transport Association’s industry-wide ticketing database which includes, but does not include, major international carriers budget airlines such as easyJet or Ryanair.
Stateside, at least one major airline warned of war profiteering.
United Airlines said in mid-October that higher jet fuel prices and the suspension of its Tel Aviv flights due to the Israel-Hamas war would eat into its profits in the final three months of the year. . United had more service to Israel than any of the US-based airlines with connections from Washington, DC; Newark, New Jersey; and San Francisco, accounting for 2% of its capacity.
Fourth-quarter guidance for United was “gloomy and worse than our estimates,” Helane Becker, an airline analyst at TD Cowen, wrote in a note after the carrier’s earnings estimate. it will be a long war here, we are looking at the lower end of the planned range and accept that there will be no service before the end of the year.”
‘As long as it’s safe, we’re going to keep flying’
The national airline of the United Arab Emirates, Etihad Airways, based in Abu Dhabi, continues to fly to Israel. It began flying its Abu Dhabi-Tel Aviv route in April 2021, about eight months after signing the Abraham Accords, which normalized relations between Israel and the UAE.
“It’s having an impact,” Etihad CEO Antonoaldo Neves said of the Israel-Hamas war, speaking to CNBC’s Dan Murphy at the Dubai Air Show on Monday. “Our request to Israel is still there. But it is not as big as it was in the past.”
“We keep flying, very safe. I follow every day, every day. And we just hope that he will recover soon. For her everyone involved in this conflict.”
“I will not tell you that it does not affect … And when things are back to normal, I am sure that everyone will remember that Etihad was not driven by profits alone,” said Neves.
“It is our responsibility as a transport company, to be there when we make money and when we make less money. So that is the approach we take, while he’s safe, we’re going to keep flying.”
Emirates charts ‘stay strong’
Meanwhile, Dubai’s flagship company Emirates Airline was optimistic about future demand.
“On the business side – look, we’ve been in a part of the world that has seen a lot of geopolitical issues for the last 35 years,” Tim Clark, president of Emirates Airline, told CNBC .
“I will not smuggle and say that we are indifferent to issues, because this is a very difficult issue for the Middle East to deal with.”
“But in terms of our reservations, they’re still strong,” he said. “We always get what we call a certain flakiness in the Asian markets where, you know, they’re a little concerned … But in general, so far, so good, we’re looking pretty strong.”
Clark highlighted upcoming events that will bring visitors to Dubai such as the COP28 climate summit in early December as well as Christmas and New Year.
As proof of its long-term optimism, Emirates Airline on Monday launched the first major contract of the 2023 Dubai Air Show with an order for 95 Boeing aircraft worth $52 billion.
“There are a lot of other things going on in Dubai and Dubai itself is a very powerful city now, the capital of the world, which includes business,” he said.
“So with all of that, despite the problems that the Middle East is having right now, I think we’ll be fine.”
— CNBC’s Leslie Josephs contributed to this report.