Asian travelers explore other options as Middle East plans canceled

As the Iran war continues, the hustle and bustle of commercial tourism in the Middle East has been replaced by the constant noise of repatriation flights, leaving travelers to navigate skyrocketing airfares and safety concerns. This is the latest airspace closure airlines have had to deal with since Russia’s invasion of Ukraine in 2022.

This is in stark contrast to the UAE Ministry of Economy and Tourism’s forecast that the UAE market size will reach approximately $950 billion by 2026. In particular, Dubai’s airport was forced to temporarily close during the conflict, and its status as a treasure for tourism in the Middle East has been shaken.

Aviation data firm Cirium earlier told CNBC that more than 46,000 flights to and from the Middle East have been canceled since the February 28 attack on Israel and the United States. And at the Aviation Festival held in Singapore in March, India’s SpiceJet said that the Middle East conflict has increased traffic between India and the region, significantly impacting its operations.

But airlines aren’t the only ones canceling flights. Travelers from Asia told CNBC they are canceling travel plans to the Middle East and considering vacations within their own region instead.

Michelle Bui, regional associate manager for public relations at Vietnam-based Ellerton & Company, told CNBC that she had originally planned to travel to the Middle East in May to visit friends in the region and spend time in the desert.

When she started looking for flights, her plans were quickly scrapped because the prices were “so high” that she couldn’t justify the expense, she said in an interview with CNBC. Airfares are also rising due to soaring fuel prices in the aftermath of the Iran war. Bui found that flights from Vietnam to the Middle East cost about $1,500 to $2,000 as of March, including connections.

Jay Ellenby, president of Safe Harbors Travel Group, said in an email that many travelers cite non-refundable fare change fees as the biggest factor in canceling. Travel agents have seen a notable 20-30% increase in Middle East flight cancellations from their Asian customers, with many citing the $450 non-refundable fare change fee for international travel as the biggest factor in cancellations.

Instead, these travelers are focusing on Southeast Asian hubs such as Singapore and intra-Asia routes, Ellenby added.

Booking platforms collate user data to create more effective recommendations for travelers looking to plan connections and tickets.

Travel websites are trying to help shoppers find quick solutions instead of having to open multiple booking tabs, said Maurizio Garabello, senior vice president at data analytics firm Qlik.

“Are you checking three times because the price is different, there’s a promotion, or are you checking three times because you can’t find something comfortable[for your trip]?” Identifying the consumer’s problem makes it easier for companies to provide solutions and earn additional booking dollars, he said.

Business travel is no exception.

Voluntary cancellations of routes from Europe to Asia more than doubled in the first week of March as some companies suspended travel to risk areas until further notice, data from travel agency Park showed. This is likely a sign that companies are “considering their options to ensure their employees are protected from risk,” Park President JC Tawnei Bucaro said in an email to CNBC.

Vincent Siow, General Manager, Singapore and Brunei novo nordisktold CNBC that his flight from Copenhagen to Singapore on February 28 was canceled and he was temporarily stranded in Dubai.

Novo Nordisk’s security team arranged a flight for Siou from Dubai via Doha and Riyadh to Istanbul and then back to Singapore, a complicated route at best.

For business travelers like Shiou, business travel is likely to continue. “We will continue to have meetings,” Siou said. “We just need to plan properly and try to avoid flying in that zone.”

For some companies, traveling closer to home or through other means is proving to be a more attractive option.

Singapore Cruise Center CEO Jacqueline Tan said occupancy rates for passengers traveling by ferry from Singapore to Indonesia’s Batam island were good. Tan said some Singaporean companies operate offshore manufacturing operations in Batam, while others send staff to Batam for meetings and corporate retreats.

Despite the S$6 ($4.66) fuel surcharge, Horizon Ferries, which operates vessels on the popular 60-minute route between Singapore and Batam, saw customer numbers “remaining quite strong” in March, Mr Tan added.

Local travel, especially on ferries and cruises, “gives you instant gratification for a short vacation. You don’t have to think about it and it doesn’t cost a lot of money,” Tan said.

He added that companies operating corporate retreats in Batam, as well as weekenders looking for cheap holidays, can travel for less than in their home city thanks to the strength of the Singapore dollar.

Vacationing in Vietnam is now a more attractive option for Bui, but given that domestic flight prices doubled in April compared to March, she told CNBC she would likely travel by train or car.

Mastercard’s chief economist for Asia Pacific, David Mann, told Squawk Box Asia in March that traveling within their own region has generally become a more attractive option for Asians.

Unrest in the Middle East due to rising airfares has made costs a little too high for many Asian travelers, he said. The jury is still out on how long this trend will continue, but Mann said much will still depend on whether oil and jet fuel prices continue to rise.