Global airline stocks such as Hong Kong’s Cathay Pacific, Malaysia’s AirAsia X, Singapore Airlines and Australia’s Qantas Airways plunged up to 12% in intraday deals on Monday, March 2, as the war between the US and Iran inflicted adouble-whammy for aviation companies.
The Middle East conflict not only led to a spike in crude oil prices — a key input cost for the airlines — but also caused travel disruptions, forcing air closures and cancellations of flights as key Middle Eastern hubs, including Dubai and Doha, remained shut.
Oil price impact
Crude oil prices surged to their highest since January 2025, as Iran and Israel stepped up attacks in the Middle East, damaging tankers and disrupting shipments from the key producing region – the Strait of Hormuz.
Brent futures traded about 5% higher at $76 per barrel after rising 13% in early trade. According to Harshal Dasani of INVasset PMS, fuel accounts for a significant portion of airline operating costs, and any sustained spike in oil directly compresses margins.
“Add to that potential airspace disruptions, higher insurance premiums, and weaker discretionary travel demand if tensions persist — the risk profile for the sector rises sharply,” he said.
Travel disruptions weigh
Additionally, several airlines cancelled flights to the Middle East as Dubai International Airport, Kuwait’s main airport and Abu Dhabi Airport were among the major airline hubs that were shut.
According to a Reuters report, Singapore Airlines cancelled flights to and from Dubai through March 7, while Japan Airlines suspended its Tokyo-Doha flights for the time being.
Cathay Pacific said it had cancelled all of its flights to the Middle East, which include passenger services to Dubai and Riyadh, until further notice. Back home, Indian airlines have cancelled ~179 flights till March 1 midnight as the US-Iran war continued to disrupt operations.
Dubai was the world’s busiest international airport in 2024, according to Airports Council International, with its 92 million travellers topping London’s Heathrow by 13 million. Doha was the world’s 10th busiest international airport that year.
Airline stocks tumble
Against this backdrop, aviation stocks nosedived, with AirAsia X emerging as the worst performer. The stock lost over 12%. Meanwhile, Qantas share price lost 10.4% to hit the lowest level in 10 months, before paring some losses to trade down about 6%. The fall came even as Qantas does not fly to the Middle East and instead relies on a codeshare partnership with Dubai’s Emirates, the Reuters report added.
| Airlines | Intraday fall |
|---|---|
| EVA Airways | 6.05% |
| China Airlines | 7.55% |
| AirAsia X | 12.12% |
| China Southern Airlines Company Limited | 6.70% |
| Air China | 8% |
| Singapore Airlines Limited | 7.50% |
| Qantas Airways | 10% |
| Japan Airlines | 7.06% |
| Cathay Pacific Airways | 7.04% |
Additionally, other aviation companies like EVA Airways, China Airlines, China Southern Airlines Company and Air China, along with Singapore Airlines. Cathay Pacific and Japan Airlines were down 6-7% each.
“The sharp sell-off in Asian airline shares reflects market concerns over higher fuel costs, flight cancellations, and incremental costs from rerouting flights following airspace and airport closures,” Morningstar equity analyst Nicole Lim told Reuters.
Back home, too, shares of IndiGo and SpiceJet faced a selloff, losing up to 5%. According to JM Financial, escalation of conflict in the Middle East presents a near-term negative for IndiGo, driven by disruption to Gulf airspace and potential operational constraints at Dubai, which could temporarily reduce international ASKs, depress connectivity traffic, and lower aircraft utilisation.
Concurrently, a geopolitical spike in crude oil prices poses margin risk given IndiGo’s high fuel cost sensitivity and limited hedging. “For every USD5 increase in Brent price, Indigo’s earnings are expected to contract by ~13% as per our calculation,” the brokerage opined.
(With inputs from Reuters)
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