Airlines are feeling the impact of the Israel-Hamas war, with bookings already hit

Business
admin
November 14, 2023
0
90
9 minutes read

An Etihad Airways Boeing 787-9 “Dreamliner” aircraft displays Israeli and Emirati flags after landing upon arrival from the United Arab Emirates (UAE) at Israel’s Ben Gurion Airport near Tel Aviv, on 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 bookings 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 flight bookings were 20% below 2019 levels in the three weeks following the attack by the Palestinian militant group Hamas against Israel on Oct. 7, and 5 percentage points below the period of three weeks prior to the attack.

The terrorist attack killed some 1,200 people and saw a further roughly 240 taken hostage, triggering the most ferocious Israeli response that the region has ever seen. Israel’s aerial bombing campaign and subsequent ground offensive in Gaza has killed more than 11,000 people, according to health authorities there.

In the days following the attack, major airlines suspended or reduced flights to Israel’s Ben Gurion Airport in Tel Aviv. But air travel demand to and from other countries and regions was noticeably affected, too.

In the three week period before Oct. 7, ticket issuance from the Middle East was just 3% below 2019 levels, according to ForwardKeys data, illustrating the steady recovery of the sector from the Covid-19 pandemic. In the three week period after Oct. 7, by contrast, ticket issuance from the Middle East was 12% lower than 2019 levels, marking a difference of 9 percentage points.

But the biggest drop in terms of international departures was in flight ticket issuance from the Americas, which was actually up 6% from 2019 levels in the three weeks before the attack, and fell to 4% below those levels in the three weeks after, totaling a drop of 10 percentage points.

International arrivals to the Middle East meanwhile plunged by 26 percentage points in that time frame, with the biggest drops by country being Israel, followed by Saudi Arabia, Jordan, and Lebanon. ForwardKeys draws its data from the International Air Transport Association’s industry-wide ticketing database which includes major international carriers, but does not include budget airlines like easyJet or Ryanair.

Stateside, at least one major airline made a profit warning concerning the war.

United Airlines in mid-October said that pricier jet fuel and a halt to its Tel Aviv flights due the Israel-Hamas war would eat into its profits in the last three months of the year. United had more service to Israel than any of the U.S.-based airlines with links from Washington, D.C.; Newark, New Jersey; and San Francisco, accounting for 2% of its capacity.

The fourth-quarter guidance for United was “bleak and worse than our estimates,” Helane Becker, an airline analyst at TD Cowen, wrote in a note following the carrier’s earnings estimate. “Given the projections that this will be a long war we are looking at the lower end of the forecast range and assuming no service by year end.”

‘As long as it’s safe, we’re going to keep flying’

The United Arab Emirates’ national airline, Abu Dhabi-based Etihad Airways, continues flying to Israel. It began flying its Abu Dhabi-Tel Aviv route in April of 2021, roughly eight months after the signing of the Abraham Accords, which normalized relations between Israel and the UAE.

“It’s impacting,” Etihad CEO Antonoaldo Neves said of the Israel-Hamas war, speaking to CNBC’s Dan Murphy at the Dubai Airshow on Monday. “Our demand to Israel is still there. But it’s not as big as it was in the past.”

“We keep flying, very safe. I follow up every day, every day. And we just hope it gets over soon. For the sake of everyone involved in this conflict.”

“I’ll not tell you it’s not impacting … And when things are back to normal, I’m sure that everyone’s going to remember that Etihad was not driven only by profits,” Neves said.

“We have our obligation as a transportation company, to be there when we make money and when we make less money. So that’s the approach we take, as long as it’s safe, we’re going to keep flying.”

Emirates bookings ‘remain robust’

Dubai’s flagship Emirates Airline, meanwhile, was optimistic about future demand.

“As far as the business is concerned — look, we have been in a part of the world that has seen for the last 35 years a lot of geopolitical issues,” Tim Clark, president of Emirates Airline, told CNBC.

“I won’t be smug and say we’re impervious to issues, because this is a really difficult issue for the Middle East to deal with.”

“But as far as our bookings are concerned, they remain robust,” he said. “We will always get what we call a certain flakiness in the Asian markets where, you know, they get a little bit concerned … But generally, so far, so good, we’re looking very strong.”

Clark pointed to upcoming events that will bring visitors to Dubai like the COP28 climate summit in early December as well as Christmas and New Year.