Airlines whose hub airports sit inside directly affected countries face the steepest financial exposure from a regional aviation crisis that has now wiped out more than half of all scheduled flights across the Middle East since late February.
Cirium, an aviation analytics firm, recorded more than 72,000 flights originally scheduled into and out of the region between February 28 and March 9, of which over 40,000 were cancelled.
The disruption stems from sweeping airspace closures triggered by Israeli and US strikes on Iran on February 28 and the Iranian retaliatory attacks on Gulf states that followed. Carriers across the UAE and other affected Gulf countries suspended operations for several days before partially resuming services through a limited air corridor established by regional governments.
Fitch Ratings has warned that how long the disruption lasts will be the decisive factor in determining the damage to airlines, airports, lodging providers, insurers, and aircraft lessors. The agency’s current projection assumes the conflict will be short-lived.
“Our baseline expectation that the conflict in the Middle East will last less than a month should limit the implications for Fitch-rated issuers in sectors affected by the aviation disruption. A more prolonged disruption could have more significant implications for affected sectors and issuers, particularly smaller and less diversified ones,” Fitch said, while cautioning that its base case carries unusually high uncertainty.
Major hub airports across the GCC have faced significant schedule disruption and congestion as airlines rerouted or diverted services where possible.
“Airlines face lost revenue from flights not operated, with the greatest exposure concentrated among carriers whose hubs are located in directly affected countries,” Fitch added.
