'Dream holidays' in disarray, trips diverted as travellers count cost of Iran war

By Christine Chen, James Redmayne and Joanna Plucinska

SYDNEY/LONDON, March 13 (Reuters) - In the remote Western Australian town of Dardanup, accountant Natasha Earle and her family are feeling the financial pain of the U.S.-Israeli war with Iran.

Their "once-in-a-lifetime" five-week trip to Europe - booked last May on Emirates and taking them to London, Paris, Berlin, Vienna and Rome - has been upended by the conflict, and is costing roughly A$10,000 ($7,000) more as they reroute to avoid disruptions from drone and missile fire in the Middle East.

"We've spent tens of thousands of dollars on this holiday," said Earle, who is due to fly at the end of this month amid the biggest disruption to global travel since the pandemic. "We should get at least half of that back from Emirates eventually."

With the Gulf serving as a global crossroads for commercial aviation, the Iran conflict underscores how quickly a problem in a single region can paralyse travel worldwide, driving up prices, squeezing capacity and throwing holiday plans into disarray.

Drone and missile fire have regularly left aircraft circling near Dubai as the war enters its third week, heavily impacting Middle East tourism worth some $367 billion annually to the region.

Combined, Emirates, Qatar Airways and Etihad Airways normally fly more than half of all passengers between Europe and Australia, New Zealand and the nearby Pacific Islands, according to Cirium data.

The war has already led to the closure of much of the Middle East’s airspace due to the risk of missiles and drones, leading to tens of thousands of flight cancellations, reroutings and schedule changes worldwide, disrupting the lives of millions of people.

New Zealander Jacob Brown, 34, who lives in the Qatari capital of Doha, drove through the desert of neighbouring Saudi Arabia to Riyadh where he caught a plane to London after his Qatar Airways flight from Doha to New Zealand - where he was due to be best man at a wedding - was cancelled.

A journey that should have taken him less than 24 hours ended up taking several days due to closed airspace, additional flight chaos, delays and lost baggage.

"It was pretty nerve-wracking flying out of Riyadh just considering that that morning, there had been a few missile interceptions south of the capital," he said.

Aditya Kushwaha, an Australian disability support worker living in Orange near Sydney, has booked a family holiday to London and Paris from April 13 to 29, with Emirates through Dubai. He is unsure if it will go ahead.

"We are very much in a dilemma of what to do," Kushwaha said, estimating he might lose more than $10,000 if he cancels the trip and only be able to afford it again in a few years.

DREAM HOLIDAY TURNS TO NIGHTMARE

For Australian Kellee Smith, her "dream holiday" to Europe at the end of March - planned 12 months ago - with her husband and two children has also turned into a "nightmare" and left her roughly A$5,500 out of pocket.

"I've had many sleepless nights as I was stressed thinking I’m going to lose my dream holiday ... and all the money we paid," said Smith.

She is waiting for a refund from Emirates of more than A$4,000 after securing back-up flights with Cathay Pacific 0293.HK and Qantas QAN.AX to fly through Asia rather than the Middle East.

The war has narrowed an already-slim flight corridor for long-haul flights between Europe and Asia, complicating operations for global air carriers and sending ticket prices sky-high.

As the conflict rattles businesses worldwide and drives oil prices higher, concerns over jet fuel costs and supplies are also weighing on airlines, with many raising fuel surcharges and some, such as Air New Zealand AIR.NZ, cutting flights.

The International Energy Agency has said the war is creating the biggest oil supply disruption in history, while some analysts have warned it could be only a matter of weeks before airlines run out of jet fuel. Vietnam said this week it could face aviation fuel shortages as soon as April due to the conflict.

'TRAVEL VIRGINS' STEER CLEAR OF MIDDLE EAST

In the British city of Bath, John Moore, 81, and his wife Pauline - who describe themselves as "travel virgins" - forked out "a couple of hundred pounds" to switch their flights to the Australian city of Brisbane from Qatar Airways to Qantas.

They will transit through Singapore instead of the Middle East.

"We decided we'd rather pay the extra to book via Singapore, which is no guarantee, but clearly it's likely to be safer than the current route," Moore told Reuters.

For others, the prospect of travel disruptions due to the war is not worth the risk.

Sumit Sharma, who lives in Sydney and works at Westpac Banking Corp., had planned to travel on Etihad Airways with his family to Dubai, but changed his plans after Etihad confirmed he was eligible for a refund.

"We changed the plan from the Middle East to Hong Kong," Sharma said, adding that he was now flying with Cathay Pacific and looking forward to taking his son to Disneyland.

Shobana Gopal, a senior consultant with Alliance Insurance in Sydney, has switched her family's travel plans to China instead of flying through Dubai to get to Austria.

"We're going to three cities in China," Gopal said.

Qantas said more passengers were choosing to travel to Europe via the U.S., other Asian cities and Johannesburg in South Africa, using its partner network.

Hong Kong's Cathay Pacific, said this week the airline was seeing "drastic changes in terms of demand patterns due to the Middle East situation," while budget carrier Ryanair RYA.I highlighted a surge in bookings to European destinations as travellers avoided the Middle East.

Lufthansa LHAG.DE said demand for routes through Europe had surged, with the German carrier flagging that 12-month forward bookings for direct flights to Asia were up 75% year-on-year.

"The large Middle Eastern airlines like Emirates and Etihad can't fly the routes they should, and therefore the European and Asian airlines have to pick up that traffic," aviation specialist Hans Joergen Elnaes said.

(Reporting by Christine Chen, James Redmayne and Cordelia Hsu in Sydney; Joanna Plucinska in London, Kimberley Vinnell in New Zealand, Alessandro Parodi in Gdansk, Stine Jacobsen in Frankfurt; Additional reporting by Doyinsola Oladipo; Writing by Anne Marie Roantree; Editing by Kate Mayberry)

((annemarie.roantree@thomsonreuters.com; +852 97387151; Reuters Messaging: annemarie.roantree.thomsonreuters.com@reuters.net/))