Asean airports, airlines face capacity test as Gulf conflict diverts passenger traffic

[SINGAPORE] The closure of Middle East airports – key transit points between Asia and Europe –  due to the ongoing Gulf conflict has diverted travellers to South-east Asian aviation hubs such as Singapore and Bangkok.

While this shift has benefited European and Asean airlines, it is also straining the capacity of both carriers and airports, with at least one industry observer describing the situation as “a troubling crisis”.

Speaking to TTG Asia on Mar 11, Subhas Menon, the director-general of the Association of Asia Pacific Airlines, pointed to two possible situations that could “stymie the ongoing development of the airline industry”.

“One is supply chain (issues); the other is airspace closures due to (the) conflict,” he told the trade business publication.

Boost for Asean carriers

The traditional Europe-Asia transit hubs of Dubai and Doha have come under attacks and repeated closures amid the Iran war, severely denting traffic figures for Middle Eastern carriers Emirates and Qatar Airways in March. 

In their places, Asian carriers like Singapore Airlines (SIA) and Cathay Pacific have been mopping up the additional demand for their flights, with travellers drawn to their safety and reliability.

As a result, ticket prices for Asian carriers have gone up, strengthening their profit margins, noted industry watchers.

Travellers are also opting to travel through “safe” gateways in Asean, like Singapore’s Changi Airport and Bangkok’s Suvarnabhumi Airport.

Data from corporate travel agency FCM Travel, for instance, showed a 38 per cent jump in bookings for non-stop flights between Europe and Australia through Singapore by corporate travellers when comparing the period between Mar 2 and 15 and the preceding two weeks.

This comes even as airfares on routes between Europe and Asia have risen by up to 5.6 times, said Alton Aviation Consultancy.

Analysts believe corporate travellers are willing to pay top price for the safety and operational certainty offered by these routes.

Airport congestion

Airlines have already begun adding seat capacity in South-east Asian airports to bypass the Gulf. Between Mar 10 and Mar 19, British Airways added over 3,300 seats through extra services to Singapore and Bangkok to accommodate displaced passengers.

Similarly, Lufthansa and Air France have deployed larger aircraft and additional short-notice flights to Changi and Suvarnabhumi to absorb the overflow.

However, with Asean’s aviation hubs already congested, the surge in demand for non-stop flights to Europe from Asean’s aviation hubs could further stretch the region’s airport capacity, analysts said. 

Major hubs like Changi are being pushed closer to their flight capacity limits due to the Iran war, said Mayur Patel, the regional sales director of aviation data platform OAG.

“The current pressure is merely a tightening of already-constrained systems, as many of these airports were already projected to remain congested through 2026,” said Patel.

Singapore’s Changi Airport handled nearly 70 million passengers last year – a record high that has brought it closer to its maximum annual capacity of 90 million passengers.

Its neighbour to the north, Kuala Lumpur International, processed 63.3 million passengers in 2025, just 6.7 million shy of its on-paper maximum.

Suvaranabhumi Airport in Bangkok is even closer to its limit, having handled 62.9 million passengers in 2025 when its peak rated capacity is 65 million.

All three hubs are actively upgrading their capacity, but such works are only expected to be completed well into the 2030s.

Airline crunch

Airlines, too, are likely to find it tough to scale up their seat supply to capture the expanded non-stop market between Europe and Asia. 

A chronic aircraft shortage – driven by post-pandemic engine recalls and delivery delays at Boeing and Airbus – has left the industry with almost no “spare” planes to deploy, said Menon.

Airlines have thus been unable to sustain a permanent increase in scheduled flights. What they are doing instead, is to provide one-off, “discretionary” flights that prioritise destinations with the greatest passenger demand, he noted.

To make matters worse, the Iran war has led to airlines like Vietnam Airlines, Philippine Airlines and Air New Zealand cancelling flights as jet fuel prices surge and supply contracts. Even in the oil-exporting US, carriers such as United Airlines have suspended some unprofitable routes.

Jet fuel in Asia stood at US$1,619.07 per tonne, or about US$205 a barrel as at Mar 20, data from the Platts Jet Fuel Price Index indicated.

As a result, the supply of flights has struggled to keep pace with the sudden surge in demand for non-stop travel to and from Asian airports. 

To ramp up airline capacity, European carriers are actively reallocating seat capacity away from cancelled Middle Eastern destinations and funnelling it toward Asean hubs like Singapore and Bangkok, noted Linus Benjamin Bauer, founder of aviation consulting firm BAA & Partners.

For instance, British Airways recently added seven return services to Singapore and Bangkok, providing 3,300 extra seats in a single week, using aircraft that were sidelined by its suspended Gulf network. Similarly, Lufthansa diverted jets from its cancelled Middle Eastern routes to bolster its Munich-Bangkok frequency.

Whether this shift represents a long-term “re-rating” of Asean hubs or a temporary geopolitical bottleneck has split analysts. BAA’s Bauer, for example, argues that the current crisis has broken the Gulf carriers’ dominance over flight routes between Europe and Asia. 

Other observers have forecast that the impact on the region’s travel economy is in its early stages and may worsen in the coming months.

Gary Bowerman, an analyst at travel research house Phocuswright, expects increased demand for travel within Asia – though weak forward bookings for Thai Airways hint at a “very weak” regional market, said independent aviation consultant Brendan Sobie.

He also views the surge in traffic through Asean aviation hubs as temporary and expects the industry’s reliance on major transit hubs such as Dubai and Doha to reassert itself once the geopolitical situation stabilises.

Therefore, even with longer-term travel patterns murky, jet fuel costs rising, and flight supply limited, the rising demand may still not translate into higher profits for airlines.

OAG’s Patel said: “While carriers such as Cathay Pacific and Singapore Airlines are relatively better positioned due to stronger balance sheets, cargo exposure, and more disciplined hedging strategies, the overall margin environment remains under pressure.”