00:00The normal service, regular service, still very much suspended in the region.
00:04So if you think about the big three, Emirates, Qatar Airways, Etihad Airways,
00:08they don't have any regular service at the moment.
00:11And that's been the case since last Saturday, since the hostilities began.
00:15As you said, we have more than 20,000 cancelled flights at this point.
00:19I would assume that to go up to close to 30 in the next couple of days.
00:23Emirates has already said, don't expect any regular service, commercial service,
00:28until the weekend, and I could see that getting extended into next week.
00:32We have seen some sort of pockets of activity,
00:36so a couple of sort of rescue flights that are taking place.
00:39Some governments are sending in chartered aircraft.
00:42People are trying to get out via places like Oman,
00:46which is about a five-hour drive from Dubai or via Saudi Arabia.
00:51Those two markets are still open, so you can get some people out there,
00:55but it's a real squeeze, and it's nowhere near the normal capacity
00:58that you would have from these big airports.
01:01And if the conflict drags on, which airlines or regions in the aviation industry
01:05are most exposed?
01:09Well, the most exposed are obviously the local ones,
01:12so that would be Emirates, which is by far the biggest.
01:14Emirates is the world's biggest international airline.
01:17They have a massive fleet of Boeing and Airbus aircraft,
01:20and they've really built their entire sort of business model
01:24around this sort of idea that you can connect any two points on the planet via Dubai.
01:29So you go from the U.S. to Dubai and then on to Asia
01:32or the other way around or on to Australia,
01:34and that's why these hubs have become so popular.
01:38But what they're now realizing is that, you know,
01:41you can't really cheat geography,
01:43and you are in a very difficult part of the world that is conflict-prone,
01:50and they will have to bear the consequences of that.
01:53It's all a question of how long will this drag on for?
01:56If this is over swiftly,
01:58then probably the industry will show its resilience
02:02and will bounce back fairly quickly.
02:04But if this drags on, and, you know,
02:06God forbid if there's some catastrophic development,
02:09you know, a shoot-down of an aircraft or something like that,
02:13then obviously that changes the equation quite dramatically.
02:16Either way, you have this reputational hit on the airlines.
02:20People will start thinking twice about connecting through the Middle East,
02:24and they will certainly think twice about going there on vacation,
02:27which had also been a big thing for the region,
02:30like not only use it as a transfer hub,
02:32but to actually stay there,
02:33stay in a fancy hotel in Dubai, in Doha, in Saudi.
02:36A lot of people have second thoughts on that right now.
02:40You know, every time I buy an airline ticket,
02:43the question is, do I buy the insurance for the ticket?
02:45And I usually do not.
02:48So, Benedict, we've seen some reporting out of Bloomberg.
02:50Hundreds of thousands of travelers are discovering
02:52that their travel insurance won't cover replacement flights
02:56or extended hotel stays.
03:00That's a problem.
03:02Yeah, it really is.
03:04And, you know, I'm like you, I usually look at that extra cost
03:06and I think, well, this ticket was expensive enough to begin with.
03:10I'm going to skip the insurance.
03:12And in this case, as you said,
03:14you have all these people that are stranded.
03:18And to be fair, a lot of people might have a certain sort of schadenfreude
03:21of thinking, oh, well, you know,
03:22it's all those influencers and crypto bros in Dubai.
03:26You know, I'm not going to shed a tear for them.
03:28But the truth is, there's a lot of very average travelers and tourists who are there
03:33and who are really in a tough spot right now
03:36and who might not have the thousands or tens of thousands
03:39to get a private jet out of the region.
03:41And for them, this is a really difficult moment.
03:43And this is where the government's come in.
03:45This is where really some sort of, you know, endurance comes in.
03:50And so we're talking many days that these people have to hang out there.
03:53And insurance companies will look at this and will say, sorry, this is force majeure.
03:57Nothing we can do there.
03:59This goes beyond the normal insurance claims that we would have covered.
04:03So, you know, maybe you and I are right not to shout out that extra money for the insurance
04:07because, you know, we would have been in the same spot.
04:10It's definitely a financial risk for airlines and passengers.
04:13And airlines are already dealing with higher costs because of the surging oil prices.
04:17Talk to us about how this conflict is creating a double hit, so to speak, for the aviation sector.
04:24It will be very tough.
04:26I mean, if you look at this year, the industry felt really good going into 26.
04:30I think 25 was a tough year starting out.
04:33Everyone started sort of feeling good about the year.
04:36Then the tariffs hit and everything kind of went south.
04:38And there was a bit of a recovery towards the end of the year.
04:41And if you look at what the likes of United, of Delta, American have said, you know,
04:46they were looking into an upbeat 26.
04:48And in no small part that had to do with fuel costs.
04:51People were quite upbeat about the lower cost of fuel.
04:55People were looking forward to big events like the World Cup, thinking that's going to be a big inflow of
05:01tourists.
05:01And all of that is now sort of out of the window, at least for the time being.
05:05Fuel costs are the single biggest expense for an airline, and those are definitely going up.
05:10But it's not just that.
05:11It's also sort of the longer routes that you have to take.
05:14A lot of airline traffic passes through the Middle East.
05:17It's just a very sort of important artery to get from east to west.
05:21So if you have to fly a longer route, that adds time.
05:24But it also adds extra cost because of the additional fuel that you burn.
05:28And then finally, these carriers in the Middle East, they won't go down without a fight.
05:33And the best way to bring back tourists and bring back travelers is to really bring in competitive fares.
05:39So you might be looking at a price war that the likes of United, that the likes of Lufthansa, that
05:47the likes of Singapore.
05:48So the other carriers that are not directly affected will have to bear out.
05:52So that will be a very interesting dynamic that will play out in the industry.
05:56How do you bring capacity back into the cabin?
05:58How do you incentivize people to go back through places like Dubai?
06:03And one way they can do that is with rock-bottom fares.
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