DUBAI, March 4 – The sharp selloff in global airline stocks showed signs of stabilising on Wednesday as the first repatriation flights began operating from parts of the Middle East, offering limited relief to stranded travellers and jittery markets. While the military confrontation involving Iran continued to escalate, investors appeared to pause after days of heavy losses, even as airspace closures across the region kept much of the global aviation network under severe strain.
Governments scrambled to organise emergency flights to bring home citizens caught by the sudden shutdown of major airports and flight corridors. At the same time, airline executives warned that the logistical and financial damage from the disruption would linger, with the industry facing its most serious crisis since the COVID-19 pandemic paralysed global travel.
Repatriation flights offer limited relief amid empty skies
Dozens of repatriation flights were scheduled to depart from the Gulf on Wednesday, marking the first organised effort to move stranded travellers since airspace restrictions were imposed across large swathes of the Middle East. Britain and France were among the first countries to arrange special flights for their citizens, while authorities in the United Arab Emirates opened limited corridors to allow some residents to return home under tightly controlled conditions.
These emergency operations stood in stark contrast to normal conditions in the region, where thousands of flights typically depart each day. The airspace above several key countries remained almost completely empty, reflecting ongoing security concerns and the closure of major hubs. Dubai, which handles more international passengers than any other airport in the world, remained shut for a fifth consecutive day, underscoring the scale of the disruption.
Many tourists and expatriate workers who were unable to secure seats on official repatriation flights sought alternative routes, often involving long overland journeys or indirect connections through unaffected regions. Travel agents and embassy officials reported widespread confusion, with constantly changing advisories making it difficult for travellers to plan their exit.
According to aviation analysts, even when airspace eventually reopens, airlines will struggle to resume normal operations quickly. Flight crews and pilots are scattered across different continents after being diverted or grounded mid-journey, complicating scheduling and compliance with safety regulations. One senior airline executive, speaking on condition of anonymity, said the process of reuniting aircraft with crews could take weeks rather than days, especially for long haul carriers.
Cargo operations have also been severely affected. The Gulf plays a central role in global air freight, linking manufacturing hubs in Asia with markets in Europe and North America. With key routes unavailable, companies reliant on just in time supply chains are facing delays and rising costs, adding pressure to international trade already weakened by geopolitical uncertainty.
Airline stocks stabilise after steep losses
After several days of sharp declines, airline shares were less volatile in European and Asia Pacific markets on Wednesday. Investors appeared to reassess the immediate impact of the conflict after billions of dollars were wiped from airline valuations earlier in the week.
In Europe, shares in Lufthansa rose around 1.7 percent in late morning trading, recovering a fraction of the losses suffered over previous sessions. Australia’s Qantas fell a further 2.7 percent, extending a difficult week but at a slower pace than earlier selloffs. Both airlines have lost more than 10 percent of their market value since the conflict intensified, marking their worst weekly performance in almost a year.
The owner of British Airways, International Consolidated Airlines Group, saw its shares rise by about 2 percent after plunging more than 11 percent over the previous three days. Market participants said bargain hunting and short covering helped support prices, even as the underlying risks remained unresolved.
In Asia, airline stocks also pared earlier losses, although declines were still pronounced. Korean Air Lines shares fell nearly 8 percent, following a drop of more than 10 percent the day before. Analysts noted that regional markets were reacting with a slight delay, as some exchanges had been closed earlier in the week when the conflict escalated.
“It is just a different market reaction time, as many European airlines had already adjusted earlier,” said Gary Ng, senior economist at Natixis, in comments shared with clients. He added that expectations of a prolonged conflict, combined with higher energy prices and weaker regional currencies, were weighing broadly on the aviation sector, including carriers in the Asia Pacific region.
Japanese airlines were also under pressure. Shares in Japan Airlines fell almost 3 percent on Wednesday, adding to losses of more than 6 percent a day earlier. In China, major state owned carriers Air China and China Southern Airlines ended the session between 1 percent and 3 percent lower.
Beyond immediate travel disruptions, rising fuel costs are emerging as a major concern for airlines. Oil prices have surged since the outbreak of hostilities, with Brent crude climbing by roughly 14 percent in just a few days. Jet fuel is one of the largest operating expenses for carriers, and sustained increases could significantly erode margins at a time when revenues are already under pressure.
Some relief is expected from fuel hedging strategies put in place before the crisis. According to Morningstar equity research director Lorraine Tan, airlines in the region have typically hedged around half of their fuel needs. “In general, they should be able to pass through the balance of the price rise to passengers,” she said in a recent briefing, though she cautioned that higher fares could further dampen demand.
Industry experts warn that ticket prices are likely to rise even on unaffected routes, as airlines are forced to take longer flight paths to avoid closed airspace. These detours increase fuel burn and flight times, costs that are ultimately borne by travellers.
While the easing of the airline share selloff suggests that markets may be adjusting to the new reality, the broader outlook remains uncertain. Much will depend on how long the conflict continues and whether diplomatic efforts can prevent further escalation. For now, empty skies over much of the Middle East serve as a visible reminder of how quickly geopolitical shocks can ripple through the global travel industry.