Australia has significantly eased its travel warnings for a number of Middle Eastern countries, enabling its citizens to transit through and travel to major Gulf air hubs with the security of insurance coverage.
The move follows an interim deal between the US and Iran aimed at ending the war.
Foreign Minister Penny Wong confirmed that the previous “do not travel” advisory has been lowered for the United Arab Emirates, Qatar, Bahrain, Israel, and Kuwait. The new guidance advises Australians to “reconsider your need to travel” to these nations, with Ms Wong cautioning that the security situation could still deteriorate rapidly and with little warning.
This relaxation of travel advice is particularly positive for Gulf airlines. Before the conflict began in late February, these carriers transported more than half of all passengers flying from Europe to Australia, New Zealand, and the Pacific Islands, according to aviation data firm Cirium. The change could signal a cautious return to pre-war travel patterns for the region.
Many Australian travellers concerned about the risk of missiles and drones, schedule disruptions and the lack of travel insurance coverage had preferred flights on carriers like Qantas Airways, Singapore Airlines and Hong Kong’s Cathay Pacific Airways that transited in Asia, driving up airfares.
Flight Centre Travel Group (FCTG) said on Wednesday that travellers with forward bookings to Europe routed via the Middle East had typically amended or cancelled plans due in part to the government warning. FCTG leisure chief executive James Kavanagh said the downgrade was “the news a lot of Aussie travellers have been waiting for.” He added that the absence of travel insurance for people transiting through the Gulf hubs had been a barrier in recent months.
He said Flight Centre expected to see a sharp recovery in enquiries and bookings. Kavanagh said the advisory change also unlocked value fares that Middle East carriers had been offering but which travellers had been unable to capitalise on without insurance.
He cited fares of around A$1,400 ($989) for October departures and around A$2,000 for August peak travel season.
Regaining market share
Emirates said last week it would roll out incentives aimed at winning back travellers worried about the protracted Iran war, focusing on reliability and customer support rather than lower fares because the oil price remained high.
Nathan Gee, head of Asia Pacific transportation research at BofA Global Research, said restored travel insurance and more competitive pricing should help Gulf carriers regain share on routes from Australia to Europe and the UK, but the shift was likely to be gradual rather than swift. “In the near term, Asian carriers such as Singapore Airlines are still well positioned, as a portion of travellers continue to favour Asian hubs for greater certainty and smoother transit,” Gee said.
He added that with long-haul bookings typically made five to six months in advance, the stronger pricing environment should extend into the next few quarters for Singapore Airlines and Cathay Pacific, even as Gulf carriers restore capacity and step up competition. Jet fuel prices more than doubled after the Iran war began, leading many airlines to lift ticket prices, cut capacity and add fuel surcharges.
But the price gains have since receded as `the prospects of a peace deal improved. Singapore jet fuel traded at about $116 a barrel on Tuesday, higher than the pre-conflict price of around $80 but less than half of the March 30 high of $242. Oil prices slid more than 2% to new three-month lows on Tuesday, a day after tumbling nearly 5% following news of the U.S.-Iran deal, although industry officials say Middle East oil and gas output will take months to fully recover.
