Airline Stocks Fall After Middle East Strikes

Airline stocks slid on March 2 after U.S.-Israel strikes on Iran led to closures of Dubai and Doha airspace, stranding passengers worldwide and triggering a sharp rise in oil prices that pressured carriers and travel operators.

Market Impact and Airspace Disruptions

Oil prices jumped as much as 13%, reaching their highest level since January 2025. The selloff erased more than $11 billion from the market value of leading carriers. U.S.-listed airline stocks affected included American Airlines (AAL), United Airlines (UAL), JetBlue (JBLU), Delta Air Lines (DAL), and Southwest Airlines (LUV). Travel stocks in the cruise sector, such as Royal Caribbean (RCL), Carnival (CCL), and Norwegian Cruise Line Holdings (NCLH), also declined.

Dubai and Doha airports remained closed for a third day on March 2, while Jordan partially closed its airspace. Dubai, the world’s busiest international hub with 92 million passengers in 2024, saw Flydubai suspend flights to and from the city until 3 p.m. ET on March 3 (1100 GMT). Etihad resumed some services, and Israel’s Ben Gurion airport moved to a limited reopening.

Carriers imposed widespread cancellations and reroutes. Cathay Pacific canceled Middle East flights including Dubai and Riyadh and waived rebooking fees. Singapore Airlines canceled Dubai flights through March 7. Japan Airlines suspended Tokyo–Doha services. Air India canceled multiple routes and rerouted New York/Newark flights via Rome. Mainland Chinese carriers cut 26.5% of their Middle East flights for March 2–8. Tens of thousands of passengers were stranded, including Qatar Airways customers in Sydney who were rerouted via Los Angeles.

Analyst Outlook and Economic Risks

Analysts at J.P. Morgan, Goodbody, and Citi flagged rising fuel costs, cancellations, and rerouting as near-term pressures despite some hedging. Wizz Air was noted as particularly exposed in Europe due to its Israel presence. Aviation analyst Brendan Sobie highlighted Indian carriers’ vulnerability because of heavy Middle East schedules and restrictions on Pakistan airspace. VariFlight data showed sharp near-term disruption.

Hou Wey Fook, chief investment officer at DBS Bank, said oil prices could reach $100–$150 a barrel if the Strait of Hormuz were fully blocked, increasing inflation and recession risks. Neil Shearing of Capital Economics estimated oil at $70–$80 a barrel would add roughly 0.2–0.3 percentage points to developed-market inflation, while $90–$100 would add about 0.7 percentage points and reduce 2026 GDP growth. Norwegian Cruise Line Holdings had forecast weaker-than-expected 2026 profits before the latest disruption, adding strain to travel-sector earnings.