Asian travelers seek other options as Middle East plans stay grounded

Amid the ongoing Iran war, the roar of the Middle East’s commercial tourism has been replaced by the steady hum of repatriation flights, leaving vacationers to navigate the landscape of rising airfares and safety concerns. It’s yet another airspace closure that airlines have had to deal with since the 2022 Russian invasion of Ukraine.

It’s a stark contrast to a prediction from the United Arab Emirates’ Ministry of Economy and Tourism that the country would amass a market volume of almost $950 billion by 2026. Dubai, in particular, finds its position as the crown jewel of Middle East’s tourism faltering as its airports have been forced to shut temporarily during the conflict.

Canceled flights to and from the Middle East region have exceeded 46,000 since the U.S.-Israel attacks on Feb. 28, aviation data firm Cirium told CNBC previously. And at the Aviation Festival in Singapore in March, India’s SpiceJet said the Middle East conflict has significantly affected its operations due to heavy traffic between India and the region.

But it’s not just airlines that have been cancelling flights. Travelers from Asia told CNBC they have been canceling their travel plans to the Middle East and considering holidays within their own region instead.

Vietnam-based Michelle Bui, Regional Associate Manager at Ellerton & Co. Public Relations, told CNBC she initially intended to tour the Middle East in May to visit friends in the region and spend time in its deserts.

Her plans were quickly cut short when she began looking for flight tickets, as prices were “just so high,” that she couldn’t justify the cost, she told CNBC in an interview — a surge in fuel prices caused by the fallout from the Iran war has seen airfares rise. Bui found that flight tickets, including layovers, from Vietnam to the Middle East, had reached about $1,500 to $2,000 in March.

Many travelers cited non-refundable fare change fees as a top cancellation trigger, Jay Ellenby, president of Safe Harbors travel group, said in an email. There was a noticeable 20-30% uptick in cancellations for Middle East routes from the travel agency’s Asian clients, with many quoting $450 non-refundable fare change fees on international trips being a top cancellation trigger.

Instead, these travelers were pivoting to Southeast Asian hubs like Singapore or intra-Asian routes, Ellenby added.

Booking platforms have been collating user data to create more effective suggestions for travelers stuck in transit or in ticket planning limbo.

Instead of needing to have multiple booking tabs open, travel websites have been looking to help shoppers find quick solutions, according to Maurizio Garavello, senior vice president at data analytics company Qlik.

“Are you checking three times because you’re checking a different price, if there is a promo, or [are you] checking three times because you cannot find something that makes you comfortable [to travel]?” By identifying a consumer’s issue, it’s easier for a company to provide a solution and gain an extra booking dollar, he said.

Business trips have been no different.

With some companies pausing travel to risky areas until further notice, voluntary flight cancellations on Europe to Asia routes more than doubled in the first week of March, according to data from travel agency Perk. It’s a likely indication that companies are “weighing their options to ensure their employees are out of risk,” said Perk’s President, JC Taunay-Bucalo, in an email to CNBC.

Vincent Siow, general manager for Singapore and Brunei at Novo Nordisk, told CNBC his flight to Singapore from Copenhagen on Feb. 28 was canceled and he became temporarily stranded in Dubai.

Novo Nordisk’s security team organized flights for Siow from Dubai to Istanbul via Doha and Riyadh, and then back to Singapore, a convoluted route by any estimation.

For business travelers like Siow, work travel is likely to continue. “We’ll still have meetings,” Siow said, “it’s just that we need to plan properly, try to avoid flying in that zone.”

For some businesses, traveling to closer locations and via other means, is proving the more attractive option.

There has been a good take up rate for passengers traveling from Singapore to Batam in Indonesia by ferry, according to Singapore Cruise Centre’s CEO Jacqueline Tan. Some Singaporean businesses run offshore manufacturing operations in Batam, while others send staff to the island for meetings or corporate retreats, Tan said.

In spite of a fuel surcharge of 6 Singapore dollars ($4.66), Horizon Ferry, which operates vessels on the popular 60-minute trip between Singapore and Batam, has seen the number of customers in March “holding quite well,” Tan added.

Regional travel, particularly via ferry or cruise, offers “a very quick gratification for a very short get away. You don’t really have to think about it, and you’re really not spending that much,” Tan said.

Companies that run corporate retreats in Batam or weekend travelers that might be looking for an inexpensive getaway can do so at a cost lower than in their own city due to the strength of the Singapore dollar, she added.

For Bui, vacationing in Vietnam is now a more attractive option — but she’s likely to travel by train or car, given that the price of internal flights doubled in April when compared to March, she told CNBC.

Generally, traveling within one’s own region has become a more attractive option for Asians, according to David Mann, Asia Pacific chief economist at Mastercard, speaking to “Squawk Box Asia,” in March.

Instability in the Middle East with rising airfare has made the cost a bit too high to bear for many Asian travelers, he said. While the jury’s still out on how long this trend will maintain, Mann said it remains heavily dependent on whether oil and jet fuel prices continue to rise.