VIEWPOINT: War – what is it good for?

Asian Aviation Editor Matt Driskill Absolutely nothin’ as the 1970 song by Edwin Starr says. And yet here we find ourselves again at the mercy of an unstable convicted felon in the White House with his finger on the nuclear button. It was bad enough when he who shall not be named imposed tariffs on global trading partners that threw aviation into an uncertain world. At least tariffs didn’t kill anyone – that we know of. But now as the clown-in-chief rains death and destruction on Iran, people are dying and the aviation industry – globally – faces more uncertainty, higher costs, and an uncertain future depending upon how long this war lasts. In the initial stages of the US-Israeli attacks on Iran, airports around the Middle East shut down. Dubai, Doha and Bahrain were among those closed as Iran retaliated again its neighbours, stranding hundreds of thousands of people and throwing international aviation into chaos. That chaos includes a steep rise in the price of oil, which of course has a knock-on effect for aviation. Fuel is estimated to account for up to 30 percent of an airline’s costs and when Brent crude rises above US$100 per barrel, as it did at the writing of this column, jet fuel can hit up to US$200 per barrel. Airlines are already a coke and a hamburger away from losing money on a per passenger basis so any rise in fuel prices hits the bottom line. Various reports from around Asia show airlines are responding to this latest man-made crisis by raising ticket prices and pondering the grounding of planes. Indian airlines have raised prices on long-haul routes and Vietnamese state media warned airfares could increase as much as 70 percent due to the country’s reliance on imported jet fuel, according to a Bloomberg report. That same report said airlines in Asia are not as well hedged against high oil prices as rivals in Europe or the US, which has prompted low-cost Southeast Asian carriers to start gaming out scenarios where they would ground planes if jet fuel becomes unaffordable or inaccessible. While Asian carriers might see some “benefit” from the suspension of flights to and from the Middle East in the form of higher ticket prices and full planes, Middle Eastern carriers are all but shut down and as of this writing much of the region’s airspace remains closed or tightly restricted. Dominant Gulf carriers Emirates, Qatar Airways and Etihad at one point removed over 10 percent of daily international flight capacity, as measured in available seat kilometres, according to consultancy OAG Aviation. Middle Eastern hubs like Dubai, Abu Dhabi and Doha are key stopover points for long-haul travel. The Gulf’s biggest airports handle about a third of the 125 million people who travel between Europe and Asia each year, according to Roland Berger data. The US-Israel war on Iran could also have further unintended consequences on aviation. Airlines have been on a spending spree trying to order enough planes to fuel future growth. Manufacturers Boeing and Airbus have been trying to untie the Gordian Knot in supply chains that has hobbled their output and just when things were looking up, the US and Israel decide to throw a global spanner in the works. Airlines in Asia and the Middle East are reportedly reconsidering some of their orders with Boeing and Airbus as well as lessors as they work to figure out the financial hit they will be faced with due to the war. Cancelling an order or deferring an order would of course incur major penalties depending upon what stage the order was in, but there’s always that get out of jail card called force majeure that could alleviate the pain somewhat of a carrier changing its mind. Add to all of this the uncertainty facing potential passengers. Will they continue with their plans to fly long-haul when ticket prices are doubling? What will be the knock-on effects for hotels? For car rental companies? For restaurants? Ticket prices are already headed up. Direct ​flights from Seoul to London on March 11 with Korean Air Lines, for example, jumped to US$4,359 from US$564 seven days earlier, according to Google Flights data. Those kinds of numbers will give pause to most leisure travellers. Even businesses, as they did during COVID, will also cut back on travel not just for safety reasons, but no chief financial officer wants to pay those stratospheric airfares. And of course, cargo is affected as well. WorldACD reported the attacks on Iran by US and Israeli forces and the responses from Teheran have had “an immediate and profound impact on airfreight flows. Iran’s attacks on Gulf hubs forced the closure of airports and grounded the fleets of airlines based in the region, which stranded almost half of the capacity from Middle East and South Asia origins and about 15 percent of global air cargo capacity. Afflicted airports resumed operations somewhat but forwarders have resorted to charters out of Asia Pacific amid warnings that backlogs of airfreight to Europe and the US could become an issue.” So in short, because of the US-Israel war on Iran, people are dying, many of them innocent, and a key global economic driver – aviation – is facing yet another crisis that will cost hundreds of millions of dollars and threaten tens of thousands of jobs. War – what is it good for? Absolutely nothin’. 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