Airlines brace for prolonged Middle East airspace crisis

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JEREMY MAGGS: South African travellers are being caught up in growing global travel disruption as tensions in the Middle East continue to ripple through the entire aviation system. Airspace closure, rerouted flights and operational uncertainty around major hubs like Dubai and Doha are creating delays, missed connections and rising airline costs that could, I imagine, soon feed, if not already, through into ticket prices.

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To help us understand what this means for South African passengers specifically and airlines, I’m joined by Linden Birns, managing director of the agency and advisory company Plane Talking. Linden, welcome, how serious, then, is the disruption right now to global flight routes?

LINDEN BIRNS: Hi, Jeremy. By yesterday evening (Tuesday), over 12 500 flights had been cancelled. Those are flights into and out of the Gulf region or the Middle East, the affected areas. It’s impacted about 1.5 million travellers, people who were about to get on planes or who had flights scheduled this week, as well as tens of thousands of people who are now stranded in places like Dubai, Doha, Abu Dhabi and other capitals in the in the Gulf nations primarily.

The big question is, when’s it going to end? A lot of people have asked me that. We don’t know.

President Trump has indicated that hostilities could go on for four to five weeks or longer. It’s a serious worry, and at the same time, we’ve got safety regulators around the world who are also telling airlines it’s just not safe to fly to the Gulf.

As frustrating and as inconvenient and as painful the impact is in a personal and financial perspective, airlines and governments are not going to knowingly and wilfully put their citizens, passengers, air crew and aircraft in harm’s way.

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JEREMY MAGGS: Linden, airlines would be rerouting flights already, I imagine. How much longer do these alternative flight paths typically add to travel time? And I would imagine there’s a knock-on effect as far as cost is concerned.

LINDEN BIRNS: You’re quite right. We’ve seen two corridors open up, one routing through Azerbaijan and Kyrgyzstan, east-west travel going between Europe and Asia, especially to India. We’ve also seen some traffic routing south of the affected area, but through Saudi airspace, a corridor between Saudi, routing out to India.

So typically adding up to anything between two and four hours of additional travel time. That’s not just the additional fuel for that, that also impacts on crew because pilots are limited to 100 flight hours a month.

So now you’ve got pilots logging more time than they anticipated, and then are going to be displaced and left out of position. You’ve got rostering headaches. We’ve got a global pilot shortage. It’s a real HR and management headache for airlines, the same with cabin crew.

You’ve got additional maintenance that you now have to do, accelerated maintenance on aircraft, because a lot of components on aircraft have a life that’s determined on the number of flight hours that they incur. There are a whole lot of moving parts there.

Insurance cover

Then you’ve got issues with insurance cover and premiums. In the same way that oil tankers and ships passing through the Gulf are picking up higher insurance premiums, so are airlines and aircraft because war risk is usually excluded from that cover.

While we’re talking about insurance, a note here for travellers, check your travel insurance, make sure that the cover you’ve got, if you’re going on a flight that takes you through that region …

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Make sure that your cover includes any disruption of your journey or cancellation of your journey due to war or military hostilities.

A lot of those policies exclude war and military hostilities. Some of them may cover you for interruption of your journey if you’re already underway, and some of them may only cover you for cancellation of the journey. So it’s a good thing to check the small print on your travel policy.

JEREMY MAGGS: Obviously, Linden, fuel is one of aviation’s biggest costs. How quickly do longer routes then push up airline expenses and inevitably these would be passed on to passengers, which means higher ticket prices. Over what period of time though, could we start seeing that with immediate effect?

LINDEN BIRNS: I think we already have. I saw Delta Airlines, even though they are not a big operator in the Middle East but out of the US, was saying just yesterday, they’re already anticipating about $1 billion impact or hit just because of the rise in the in the spot price on jet fuel over the last 48 hours.

We’ve seen oil prices going up, and jet fuel typically trades at anything between a 20% and 30% premium on the price of Brent crude.

We saw yesterday in Europe, the spot price for jet fuel went up to over $1 133/metric ton, which was the highest since late 2022. It’s still below the $1600 mark in 2021, and it will be even higher here in South Africa and Southern Africa because we rely heavily on imported jet fuel, mostly from European suppliers.

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Then we add on to that additional costs for transport, for distribution, for storage, and then Sars (South African Revenue Service) puts statutory import duties on that and also levies any use of the jet fuel pipeline between Durban and Natref (National Petroleum Refiners of South Africa).

JEREMY MAGGS: And just a final one. Obviously then airlines are making contingency plans, they would have to be prepared at this point for prolonged disruption if tensions escalate further.

LINDEN BIRNS: They do, both in terms of a future planning, so if we just stick with the jet fuel for a second, most airlines, or the big ones anyway, have hedged a significant percentage of their future jet fuel purchases up to 12 months out. Typically, the low-cost carriers like Ryanair and EasyJet would hedge about 80% of their future fuel purchases.

The other big carriers, like Air France, KLM, around about 87%, British Airways 75%. So they’ve tried to protect themselves. They would have done that anyway looking generally at geopolitical risk, not specifically to this week’s activities, but generally.

Then, of course, you’ve got the contingencies like what we’re seeing in the Gulf at the moment, where you’ve suddenly got a lot of people who are displaced, who’ve got to be accommodated, fed and looked after.

It’s quite interesting what’s happening there from a crisis communications and reputation management perspective. The Gulf, especially places like Dubai, have tried to present themselves as safe haven for doing business and for living, almost like a Switzerland in the desert. So what we’ve seen over the last few days with the military activity there has just completely rattled confidence.

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So they’ve gone out of their way to put their hands in their pockets and say, we will look after everyone who’s affected.

We will make sure that everyone’s accommodated, fed and watered. We will try and help people get out as soon as they can. We’ve got online education systems running so people don’t have to send their kids to school and a whole bunch of other things. So we’re trying to protect our reputation and also show that we’re compassionate. That’s a good thing.

JEREMY MAGGS: Linden Birns, thank you very much indeed, from the agency and advisory company Plane Talking.