Asian Airlines Experience Surge in Europe Demand as Gulf Hub Disruption Shifts Traffic
Major Asian airlines have reported a significant surge in demand on European routes, as travelers increasingly avoid disrupted Middle Eastern hubs. This shift, driven by the ongoing conflict in Iran, is expected to persist for an extended period, even after the conflict concludes, according to industry analysts.
Strong Performance Amid Challenges
Hong Kong's Cathay Pacific Airways, Singapore Airlines, Korean Air Lines, and Australia's Qantas Airways disclosed robust performances on European routes in March. This occurred despite grappling with a doubling in jet fuel prices, highlighting the resilience of this demand surge.
Cathay Pacific's Chief Customer and Commercial Officer, Lavinia Lau, stated on Friday that the airline has mounted additional flights and capacity to Europe in March and April to cater to an upsurge in market demand. "Passengers prioritized alternative routings," she explained, noting that strong demand is expected to continue through April, fueled by Easter travel and increased long-haul bookings transiting through Hong Kong.
Singapore Airlines reported that the percentage of seats filled on its European flights jumped to 93.5 percent in March, up from 79.7 percent a year earlier. This sharp gain, the highest for any region, was attributed in part to spillover Europe-bound traffic as capacity through Middle East hubs declined.
Gulf Carrier Challenges and Market Shift
Before the conflict, Gulf carriers like Emirates, Qatar Airways, and Etihad Airways together accounted for about one-third of passenger traffic between Europe and Asia, according to aviation data firm Cirium. They also carried more than half of all passengers flying from Europe to Australia, New Zealand, and the Pacific Islands.
While these major Gulf carriers have been gradually restoring capacity—with all three reaching at least 60 percent of pre-conflict flight numbers, as per Flightradar24 data—they face significant challenges. For instance, Australia has warned its citizens not to travel to or even change planes in the Gulf, meaning such trips are not covered by travel insurance.
As a result, customers are paying a premium for flights that avoid the Gulf. Data from Google Travel shows that for economy-class Sydney-London return tickets, Etihad via Abu Dhabi is the cheapest at A$1,861. In contrast, avoiding the Middle East, the most frugal one-stop options are United Airlines at A$3,144 via San Francisco and Thai Airways at A$3,901 via Bangkok.
Analyst Predictions and Alternative Hubs
Bank of America analysts noted in a recent report that "tight pricing and share gains on Asia-Europe routes could persist for 6-12 months even after the end of the war given forward booking lags and traveler risk aversion." This suggests a prolonged impact on airline dynamics.
Korean Air reported a strong European performance in its first-quarter estimated results, with operating income up 47.3 percent to 517 billion won. The Seoul-based carrier attributed this growth partly to "increased demand between Europe and Asia due to the Middle East war," with European passenger revenue rising 18 percent from a year earlier. The airline expects "strong transit demand" to continue, benefiting from decreased market supply from Middle East carriers.
Qantas has adjusted its operations to capture this shift, redeploying capacity from US and domestic routes to expand flights to Paris and Rome. "Qantas continues to see strong demand for international travel to Europe as customers seek alternative routes," the airline stated.
Airservices Australia, the air traffic control manager, reported that Australia-Middle East traffic was down 77 percent year-on-year in March as services were rerouted via other cities. "Asian gateways such as Singapore, Kuala Lumpur, Hong Kong, Tokyo, and Seoul are capturing much of this displaced demand and may emerge as alternative hubs and travel destinations," Airservices said.
This trend underscores a significant realignment in global air travel patterns, with Asian airlines capitalizing on the disruption to Gulf hubs to strengthen their positions on lucrative Europe-Asia routes.
