Asian aviation stocks plunge as Iran conflict forces airlines to cancel flights over Middle Eastern airspace

Fortune

by Angelica Ang

March 2, 2026

AI-Generated Deep Dive Summary

Asian aviation stocks experienced a significant decline on Monday as tensions between the U.S., Israel, and Iran escalated, leading to widespread flight cancellations over Middle Eastern airspace. The conflict resulted in Iranian missile strikes targeting neighboring countries, including the UAE, prompting major airports in Doha, Dubai, and Abu Dhabi to halt operations. This move caused shares of prominent airlines like Singapore Airlines, Qantas, Japan Airlines, Cathay Pacific, and others to drop sharply—ranging from a 2.8% fall for Cathay Pacific to a 5.6% decline for Japan Airlines. The cancellations particularly affected routes connecting Asia with the Middle East. For instance, Singapore Airlines suspended 16 flights between Singapore and Dubai, while its budget subsidiary Scoot temporarily ceased operations on the Singapore-Jeddah route. The broader market reflected this instability, with indices such as Hong Kong’s Hang Seng Index and Singapore’s Straits Times Index dropping by 1.6% and 1.8%, respectively. Despite the aviation sector's struggles, defense stocks in the Asia-Pacific region saw an upward trend, driven by rising global military spending and heightened security concerns. Companies like Japan’s Mitsubishi Heavy Industries and Singapore’s ST Engineering recorded gains of up to 3.6%. Additionally, energy stocks rose as investors anticipated potential disruptions to oil shipments from the Middle East, with Brent Crude and West Texas Intermediate experiencing significant price increases. The situation underscores how geopolitical conflicts can ripple across global markets, affecting various industries differently. While airlines face immediate financial losses due to reduced operations, defense and energy sectors may benefit from long-term trends of increased spending and

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Originally published on Fortune on 3/2/2026