Commentary: Iran war tests the Gulf’s grip on aviation hub status

That said, there may be some winners in the near term. Cathay Pacific, for one, stand to gain most from the Gulf fallout.

Today, Cathay is a stronger airline than in 2019 when it suffered from protests that hurt Hong Kong’s economy and later, the pandemic. The airline has recovered and is pursuing a sound geopolitical strategy that closely aligns itself with China.

Operationally, Cathay’s jets can skirt current warzones, along the relatively safe corridors of Central Asia or simply fly through the vast Russian airspace. As a Chinese airline, it is not subjected to sanctions, unlike Western carriers that have been banned from or are avoiding the Russian airspace since 2022.

WHAT LIES AHEAD?

Moving forward, the sector is in for little reprieve.

Oil prices have been volatile this week on the back of jitters caused by the halt in shipping through the critical Strait of Hormuz, which is responsible for roughly 20 per cent of global oil consumption.

Correspondingly, prices for jet fuel have also risen. Jet fuel typically accounts for 30 per cent to 40 per cent of an airline’s operational costs, and is denominated in US dollars. Airlines whose revenues are in currencies that are weaker than the greenback will suffer the most on their bottom lines.

It is a given that airlines will impose fuel surcharges on passengers soon. Already, a handful of airlines have announced airfare hikes.