Airline stocks fell sharply on Monday as global travel chaos spread from the Middle East to the wider region as airlines in the Persian Gulf region extended flight grounding orders across the board and some of the world's busiest airports suffered severe operational disruptions.
Emirates, the world's largest international airline, announced it was suspending all flights to and from Dubai until 3 pm local time on Tuesday and warned that chaos would continue until Thursday. Etihad Airways extended flight cancellations until 2pm on Monday, while Qatar Airways said it had grounded all flights to and from Doha due to the closure of Qatar's airspace.
The impact of the disruption has rippled across Asia: Cathay Pacific canceled some flights to the Middle East through March 5 and India's IndiGo extended flight suspensions until Tuesday.
In Europe, major airline share prices plunged. Market concerns are that the conflict will dampen travel demand just as the aviation industry is about to enter the critical summer peak season. In early European trading, Lufthansa plunged as much as 11%, British Airways parent International Airlines Group (IAG) fell 13%, and Air France-KLM fell 10%.
The conflict has also pushed up oil prices, thereby increasing airlines' fuel costs - their largest single expense. The closure of the airspace means that many flights have to take longer detours, further driving up operating costs.
U.S. President Trump said the bombing campaign against Iran will continue until the goals are achieved. Airline stocks plunged across the board as investors digested the impact of flight cancellations, airspace closures and prolonged travel disruptions.
When Hong Kong opened, Cathay Pacific fell as much as 7%, Singapore Airlines fell 7.5% and Qantas fell 10%.
The UAE Civil Aviation Authority said it had dealt with more than 20,000 stranded passengers affected by the disruption. As a global aviation super hub, the Middle East can connect any two points in the world through a single transfer. This incident has caused tens of thousands of people to be stranded in the region.
In response to the first round of U.S. and Israeli air strikes on Saturday, Iran launched missiles and drones at many countries in the Gulf region, causing many airports in the region to be involved in the war.
One person was killed and several injured after the UAE intercepted an Iranian drone, Abu Dhabi Airport said. Dubai's main airport - the world's busiest international aviation hub - reported damage to one terminal and injuries to four staff.
Bahrain's main airport was attacked and damaged by a drone at night; Kuwait Airport was also attacked by a drone, and many employees were slightly injured.
While the region has become accustomed to disruptions due to repeated restrictions on large swaths of the Middle East's airspace over the past two years, a comprehensive grounding of this magnitude is unprecedented. The situation highlights the seriousness of Iran's confrontation with the United States and Israel, which has plunged the energy-rich region into turmoil.
A complete grounding will seriously disrupt the precise scheduling of global flights. Currently, a large number of aircraft and crews have deviated from their original deployment due to airspace closures, which means that even if operations resume, it may take several days to digest the backlog of flights.
Elsewhere, India's Civil Aviation Authority said local airlines canceled 410 flights on Saturday and expected to cancel 444 flights on Sunday. Airlines around the world, from Canada to Europe to Singapore, have announced they are suspending service to the Middle East.
Emirates, Qatar Airways and Etihad Airways have built huge fleets over decades to transfer passengers through their respective hubs, making the Middle East a key artery for global air traffic. These airlines have transformed from mere transfer service providers into core growth engines driving regional business and tourism development.