It has been an absolutely wild several weeks in the Middle East, as the United States and Israel launched an attack on Iran, which took out some top Iranian officials. In response, Iran launched drone attacks on nearby countries, including targeting airports, hotels, and more.
Weeks later, there’s no end in sight to this conflict, and one wonders how much longer this will drag on. There’s no denying that people are suddenly looking at airlines in the Gulf region a little bit differently, and I’d like to talk about that a bit more in this post…
Could this conflict be a turning point for some Gulf carriers?
Let me start by acknowledging that of course there are massive geopolitical implications to what we’ve seen in the past several weeks, and that goes way beyond the airline industry. However, this blog is about travel, so that’s what I’d like to focus on, while acknowledging that there are many ways this can all evolve.
Airlines like Emirates, Etihad, Qatar, etc., have all become extremely “mainstream” over the years, with so many travelers choosing to fly with the airlines when moving between other regions. So whether it’s Australians looking to travel to the UK, or Europeans looking to vacation in Southeast Asia, airlines like Emirates have become huge competitors in those markets, going head-to-head against “local” carriers.
Destinations like Dubai, and airlines like Emirates, have enjoyed such a high level of success thanks to the incredible safety within the country for visitors (both real and perceived). While the Middle East is a region that has seen its fair share of conflict over time, places like the UAE thrive on staying out of the drama, despite their geographic proximity.
So to see Dubai Airport sustain damage, and to see a fire at a hotel like the Burj Al Arab that’s due to an attack by an Iranian drone, certainly isn’t great for tourism in the country. Now, let me say that personally I’d still feel comfortable traveling to Dubai, etc. Even as we see some pretty rough images, the actual number of fatalities seems to be very limited, and that’s where I try to be rational.
The UAE offers incredible safety in so many areas for visitors, and here in the United States we have our own dangers that we try to overlook (like gun violence). So as I see it (at least as of now), places like the UAE may have more of an issue with optics than anything else.
Will these attacks change consumer behavior going forward?
In the short term, we’ve seen the major Gulf carriers all massively adjust their operations. We’ve briefly seen airlines grounded, and we’ve otherwise seen them operate a more limited schedule. The issue is that we’ve seen operations suspended so often now, which can cause extended holding at airports, diversions, etc.
To me this all raises an interesting question. If things do eventually go back to normal (or at least a new type of normal), what will that look like for Gulf carriers? Historically people have gone out of their way to fly with Gulf carriers thanks to the great service and competitive pricing.
And while I think all Gulf hubs are still incredibly safe, I can’t help but think that this situation will change optics of places like Dubai for some amount of time. I’m by no means suggesting that a majority of Emirates’ potential customers will just book away on principle.
However, I wouldn’t be surprised if a not-insignificant number of travelers might say “you know, I’ll just fly nonstop on a European or Southeast Asian carrier, rather than connecting through the Middle East.”
For that matter, a traveler can also arrive at that conclusion on an entirely rational basis, without directly considering safety — if they book a Gulf carrier, they might be concerned about how reliably they can get to their destination, and if we might see more airspace closures.
Then again, I also believe nothing is actually permanent. For example, look at all of the doom and gloom predictions we saw after the start of the coronavirus pandemic, yet the airline industry bounced back quite nicely.
So we’ll see how it all plays out. At this point, I suspect that if we don’t see a full government change in Iran, the risk of these kinds of attacks will remain in place, and I think that could cause a good number of people to book away. But we’ll see, who knows…
Gulf carriers have been growing at an impressive pace in recent years, and there’s no denying that even the demand trajectory changing slightly to be negative could have big long term implications for these airlines.
I do think that for Gulf airlines, what they’re dealing with here is essentially a coronavirus-level event, in terms of the demand impact. I’d love to be wrong, but that’s just my perspective based on there not being a clear end with this military operation.
Bottom line
It has been an awful several weeks in the Middle East, as Iran was attacked, and then responded by sending drones basically anywhere it could. On the airline front, this has caused many Gulf carriers to suspend flights for some amount of time, and also to otherwise modify their schedules.
Places like Dubai have thrived on the image of being incredibly safe. And while I think nothing has really changed, these attacks — and images of the airport and hotels being damaged — aren’t at all good. I have to imagine this could be a rough period for Gulf carriers, especially as some people may avoid future bookings just out of an abundance of caution over potential operational issues.
How do you see the Gulf carrier recovery playing out with all of this?