The sound of an international airport gradually reviving has a particular texture. Since late February, Dubai International, which normally hums with a thousand overlapping announcements in Arabic and English, has become quieter. Fewer calls for boarding. The check-in counters for Kochi, Karachi, and Manila were less crowded with families.
That began to change last weekend, but in a gradual, cautious manner that feels more like a system testing whether the ice will hold than a reopening. Emirates is operating on a shortened schedule. Etihad is still far below its pre-war capacity, but it is planning new routes to China. The main airport in Kuwait remains closed. Out of all of them, Qatar Airways is the most typical. The aviation industry in the Gulf is not recovering all at once. It is taking place balance sheet by balance sheet and airline by airline.
Naturally, the backdrop is the Strait of Hormuz, a narrow waterway that normally carries about 25% of the world’s oil and petroleum products between Iran and Oman. After the U.S.-Israeli strikes in late February, Iran effectively closed the strait, which caused more than just a stir in the oil markets. It disrupted the jet fuel supply chain. Reuters and other media outlets are still figuring out how the Gulf’s refining capacity was damaged.
Even if the strait reopens and stays open, the global jet fuel supply is months away from normal, IATA director general Willie Walsh told reporters in Singapore last week. months. Any airline’s quarterly planning would be uncomfortable with that statement. Fuel typically accounts for 27% of operating costs, making it the second-largest expense for a carrier. The math quickly becomes ugly when it doubles, as jet fuel has done since February.
Due in part to its size and in part to Dubai’s discreet handling of the publicity, Emirates has been the most prominent of the rebounding airlines. The airline confirmed on April 10 that it was running a shortened schedule to and from airports in Dubai. Between April 20 and May 31, Dubai itself placed temporary operational restrictions on foreign carriers, limiting each airline to one daily flight into DXB or Al Maktoum.
That is not a small limitation. It’s a sign that the government is putting airspace management ahead of throughput for a city whose tourism and logistics economy depends on being at a global aviation crossroads. On April 12, Emirates operated 383 flights, which may seem like a lot, but keep in mind that prior to the war, the airline operated well over 500 daily flights. The story lies in the gap.
The more notable comeback has been Qatar Airways. It surpassed 200 daily flights over the course of five days last week, reaching 274 on April 12—the highest number since the start of the war—after averaging about 130 flights per day for the majority of March. A gradual expansion toward 120 destinations by mid-May has been highlighted in the airline’s recent posts.
The figures are even more noteworthy because Doha’s airspace is still off-limits to transit flights; Qatar is rebuilding on restricted permits and unique routes. Additionally, it has the most aggressive pre-crisis growth strategy of any Gulf carrier, which means that if international capacity returns more quickly than anticipated, the balance sheet will benefit more. As of right now, Qatar Airways appears to be the region’s cleanest recovery story.
The situation at Etihad is more intriguing than it seems. On April 12, the Abu Dhabi-based airline ran 212 flights on a scaled-down but consistent schedule. Analysts are interested in what Etihad revealed during the crisis, not in spite of it. The airline will start offering daily flights from Abu Dhabi to Kabul on May 1.
With the opening of five new mainland China routes in October—Shanghai Pudong, Chengdu, Hangzhou, Shenzhen, and Guangzhou—it will have 35 weekly flights in China. These are not exercises for recuperation. During a regional conflict, these expansionist measures were declared. Depending on the analyst, that may be bold or even reckless, but it does provide insight into Etihad’s perception of the medium-term outlook. It’s obvious that someone in Abu Dhabi thinks the worst is over.
Starting on April 11, Saudi Arabian Airlines partially resumed service to Dubai, Abu Dhabi, and Amman. The kingdom’s low-cost airline, Flynas, launched a new daily domestic route between Riyadh and Al Qaisumah while extending its ban on international flights to the majority of Gulf destinations, Iraq, and Syria until April 15.
Due to the fact that Saudi airspace has remained open during the crisis, airports like Dammam and Al Qaisumah are unusually busy. As a result, these airports have effectively become relief hubs for Kuwaiti and other regional carriers whose home airports are still closed. Kuwait Airways continues to fly out of Dammam. Since the start of the conflict, Jazeera Airways has moved about 73,655 passengers through five operational hubs using Al Qaisumah and Dammam. That seems like a very impressive operational adaptation achievement. In actuality, it indicates that an airline is spending a lot more money on each flight to maintain the viability of its route network.
Beneath the upbeat press releases is the financial burden of all of this. In the United States, Delta predicted that fuel prices alone would drop by $2 billion in Q2 and announced that it would reduce capacity to partially offset the impact. The math isn’t good, but the Gulf carriers haven’t yet released comparable numbers.
The Gulf carriers, who operate on this corridor, are most likely suffering greater losses per flight if a major U.S. airline is taking that kind of hit despite having no direct regional exposure. Wizz Air, Air France-KLM, and other European airline shares surged 8 to 14% on the news of the ceasefire. This reflex indicates the extent to which their cost structure is dependent on jet fuel flows from the Middle East. A fever strikes European aviation when Hormuz coughs.
The airline sector in the Gulf seems to be at one of those awkward crossroads where financial recovery and operational recovery are happening at different times. The runways are reopening. The timetables are becoming more set. The press conferences are optimistic. However, fuel prices will remain high for months, hedging strategies that seemed wise in January now seem painful, and a two-week ceasefire is not a solid foundation for a summer schedule. IATA’s Walsh stated that he “fully expects the Gulf hubs to recover and recover quickly.”
He might be correct. Additionally, he is carefully selecting his words because he has enough experience in this field to understand that “quickly” has a different meaning in aviation than it does in most other industries. He pointed out that data from April and May will reveal the true picture. Until then, everyone else is relying solely on conjecture.
