News / Bottlenecks and price hikes as airlines now avoid Iran airspace

© Andrii Yalanskyi

Asia-to-Europe airfreight could face extreme bottlenecks and price hikes due to the rising tension in the Middle East, and sea-air transhipments from Dubai will also be affected. 

On Saturday, Iran launched around 300 missiles and drones at Israel, most of which were shot down by Israel’s US-backed missile defence system and its allies.  

Safety concerns led many major carriers to cancel or re-route flights. Lufthansa Cargo told The Loadstar it would “fly around Iranian airspace” until 19 April, at least. 

But with Russian airspace also closed since 2022, due to its invasion of Ukraine, carriers rely on Iranian airspace as a vital crossing for the in-demand Asia to Europe trade, creating concern that the airspace closure would bottleneck Asia-Europe airfreight routes further. 

Mark Zee, founder of airport and airspace monitoring company OPSGroup, told Reuters carriers on the Asia-to-Europe trade would be restricted to two viable alternative routes, either through Turkey, or via Egypt and Saudi Arabia. 

Air India told The Loadstar: “Flights taking a longer route avoiding Iranian space will certainly have impact on trade if it escalates further.” 

The drone attack has also seen major carriers temporarily suspend flights to Israel. Air India cancelled flights to Tel Aviv (TLV) until 20 April and Lufthansa Cargo has suspended flights to and from TLV, Erbil and Amman until tomorrow.

Meanwhile, an MSC ship with links to Israel was seized by Iran while transiting the Strait of Hormuz, the only sea passage from the Persian Gulf to the open ocean and one of the world’s most strategically important choke points for shipping.  

If Hormuz is considered a high-risk area like the Red Sea, this could cut off access to one of the busiest ports for sea-air transits, Jebel Ali port in Dubai. 

Last week, WorldACD reported that Dubai-to-Europe airfreight had seen a 114% increase in tonnage year on year, and cited ocean shipping disruptions as the main factor pushing volume from sea to air. The most used Asia-to-Europe sea-air hubs include Dubai, Colombo and Bangkok. 

Theoretically, if Dubai port was inaccessible, tonnage for sea-air shipments would likely be transferred to Colombo or Bangkok, both of which are already overwhelmed with a surplus of diverted Red Sea tonnage.  

However, Hans-Henrik Nielsen, global development director at Dubai-headquartered CargoGulf, told The Loadstar that “an outright closure of the Strait of Hormuz is highly implausible”. 

He explained: “There is no doubt that a difficult situation has been escalated by the seizure of the MSC Aries. However, an outright closure of the Strait of Hormuz is highly implausible right now. Who would close it?… It’s hard to see even Iran wanting to be so totally isolated. It would hurt Iran’s economy just as much.” 

But Mr Nielsen did warn that geopolitical tension would likely result in higher costs for sea-air shipments from Dubai.  

“As many have opined over the weekend, shippers need to do their own risk evaluation… and it just got a lot more difficult. We recommend checking owners, managing company, operator/charterer, flag and even relatively straightforward business transactions. 

“It’s very sad that commercial shipping has become a political bouncing ball,” he added.