As Iran war shakes global air travel, Malaysia sees both risks and opportunities
Some Southeast Asian destinations are feeling the strain from flight cancellations and rising prices, but others such as Malaysia may be better positioned to weather – or even benefit from – the upheaval, say industry players.
Passengers use trolleys to ferry their luggage at Kuala Lumpur International Airport in Sepang on Aug 12, 2025. (Photo: AFP/ Mohd Rasfan)
This audio is generated by an AI tool.
KUALA LUMPUR: The United States–Israel war on Iran has unsettled the Middle East and triggered widespread disruption to global air travel, forcing airlines to reroute flights and suspend services across key corridors linking Asia and Europe.
Airlines have been forced to avoid airspace around Iran and other conflict-sensitive zones, resulting in significantly longer flight paths, increased fuel consumption and higher operating costs.
Several airspaces in the region remain heavily restricted, with reduced flight schedules.
Tens of thousands of flights globally have been cancelled or rerouted since the conflict broke out on Feb 28, particularly affecting routes that traditionally transit through major Middle Eastern hubs.
The aviation turbulence has spilled over into the closely-linked tourism sector, including in Southeast Asia, where several destinations rely heavily on long-haul travellers.
However, while some destinations are feeling the strain from cancellations and rising prices, others such as Malaysia may be better positioned to weather – or even benefit from – the upheaval.
THAILAND, BALI AMONG MOST EXPOSED
Industry observers say Thailand and Indonesia – particularly the resort island of Bali – are among the most vulnerable in Southeast Asia to prolonged disruption.
Bali’s tourism industry depends substantially on visitors from Europe and other long-haul markets. Extended flight times, fewer available seats and higher ticket prices could weigh on travel demand, especially during peak holiday seasons.
The higher operational costs faced by airlines are being passed on to passengers through fuel surcharges and elevated fares.
Analysts warn that sustained high airfares could dampen discretionary travel in the months ahead, particularly among cost-sensitive travellers.
MIXED OUTLOOK FOR MALAYSIA
In Malaysia, the impact is expected to be more measured.
European visitors account for less than 15 per cent of total tourist arrivals, limiting the direct exposure to disruptions affecting Europe-bound routes.
However, industry leaders caution that the European market, while smaller in volume, punches above its weight in terms of spending.
“European travellers tend to stay longer, and they tend to travel a bit farther. The big questions are how long this war will last and what will be the fallout, even when it ends,” said Nigel Wong, president of the Malaysian Association of Tour and Travel Agents.
Long-haul travellers typically spend more on accommodation, tours and retail, making them particularly valuable to destinations seeking to maximise tourism receipts rather than simply arrival numbers.
Still, at least 200 outbound flights – mostly to Middle East countries – from Kuala Lumpur International Airport have been cancelled since the war broke out.
Despite the uncertainty, Wong remains optimistic that Malaysia can meet its target of 45 million tourist arrivals this year.
Strong demand from East Asia, India and intra-Southeast Asian markets is expected to cushion any potential shortfall from Europe.
The government has also stepped up promotional efforts under its Visit Malaysia 2026 campaign, rolling out marketing initiatives and upgrading tourism infrastructure to strengthen the country’s appeal.
Although the ringgit has appreciated by about 10 per cent against the US dollar over the past year, Wong said Malaysia remains competitively priced compared with regional peers.
“We’re in a sweet spot at the moment, very much like Singapore. Malaysia is very strategically positioned in terms of being a hub for air travel,” he told CNA.
He pointed to an increase in direct international routes not only to the capital Kuala Lumpur, but also to other cities such as Penang and Kota Kinabalu. In particular, expanded connections from China are helping to broaden Malaysia’s tourism base.
Wong added that ongoing improvements to infrastructure, heritage conservation and urban amenities are enhancing long-term competitiveness. However, he cautioned against complacency.
“While Visit Malaysia 2026 got a really nice jump start … What we would like to see, regardless of whatever pressures are happening now, is that we start planning for the future,” he said.
REGIONAL HUBS EYE STRATEGIC OPENING
While the conflict has disrupted flight operations, aviation authorities in the region see a potential silver lining.
With airlines reassessing the risks of transiting through Gulf hubs, Southeast Asian airports could position themselves as alternative stopover points for Europe-bound travellers, even after the conflict ends.
"What's happening in the Middle East is a good opportunity for our region to become the next hub – a safer, more stable hub to get to Europe rather than stopping in the Middle East,” said Norazman Mahmud, CEO of the Civil Aviation Authority of Malaysia.
"(Flights can be) picked up by major regional hubs like Thailand, Singapore, Hong Kong and Malaysia as well. If we can do that, it’ll probably be a good opportunity for us."
He added that Malaysia Airlines is already planning to increase its frequency to Europe, including additional flights to London and Paris, amid growing demand for direct long-haul routes that bypass traditional Middle Eastern transit points.
However, with capacity adjustments and longer flight times, airfares to Europe are expected to remain elevated in the near term.
