Why trouble in the Middle East could still impact the European short-haul market

With summer 2024 fast approaching, the European leisure travel market sits at a curious junction with the outlook being overly positive despite some very real threats on the horizon.

The EU’s own statistics office Eurostat has released data that shows in 2023 2.92 billion nights were spent in EU tourism establishments ranging from hotels to campsites.

This was the first time that the pre Covid pandemic level of 2.87 billion nights generated in 2019 has been beaten and, equally importantly, the growth was driven by the international market which increased by 89 per cent, coming to just 0.3 per cent below 2019 levels with the number expected to be beaten in 2024.

So while the overall picture looks good, scratch beneath the surface and a number of issues remain that could yet cause huge disruption across Europe’s key summer holiday offering – the Mediterranean.

Russia’s illegal invasion of Ukraine in 2023 had already caused repercussions across the travel industry and has been blamed for the slow recovery of the Chinese market to Europe.

It has also disrupted the North America market which has largely travelled to western Europe which is considered safer, while the strength of the dollar means they have been largely cushioned from rising costs and can outbid other markets for accommodation.

Known unknowns

However, a new known unknown has emerged that could yet cause chaos this summer across the Mediterranean – renewed troubles in the Middle East, triggered by October’s Hamas terrorist attack on Israel.

Both Israel’s ensuing military offensive in the Gaza Strip and more than 40 missile attacks by Houthi rebels based in Yemen on Red Sea shipping have hit the global news cycle.

While this might seem a long way from the beaches of southern Europe, the trouble is believed to be too close to comfort for some travellers and  could drive a drop in tourist numbers in the eastern Mediterranean and particularly its largest destination, Turkey.

But is this actually the case?

Certainly many of Europe’s biggest leisure airlines do have an eye on the situation and, while not trumpeting their concerns, are admitting they are fully aware of the potential for trouble.

In its Q3 2024 statement for the quarter ending 31 December, 2023, Ryanair said while it is still expecting to carry 183.5 million passengers for the whole year, a nine per cent increase on the previous year, geopolitics remain a concern.

Chief executive Michael O’Leary said: “This guidance and the full year result remains heavily dependent upon avoiding unforeseen adverse events in Q4 (such as the Ukraine war, the Israel-Hamas conflict and further Boeing delivery delays).”

Despite this concern, the airline has scheduled 98.1 million seats across Europe for the forthcoming summer season, more than the 95.6 million available in the same period in 2023.

Similarly, Europe’s largest tour operator Tui is also positive about the forthcoming summer in its Q1 2024 interim report for the period, with sales for the season eight per cent ahead of last year while average selling price is up by four per cent.

However, it also admits to geopolitical concerns, adding: “We continue to monitor developments both in the Middle East and around the Arabian Peninsula.

“We will retain the option to flexibly adjust capacity from the eastern to western Mediterranean should there be a further escalation of the conflict in this region which has a significant and prolonged effect on customer demand.”

Despite this, the operator said Turkey remains one of its three most popular destinations for the summer alongside Greece and Spain.

Meanwhile airline Jet2 and owner of the UK’s biggest tour operator Jet2holidays has also announced growing its programmes in the eastern Mediterranean as part of a wider expansion.

A spokesman said: “Traditional favourites such as the Balearics, Canaries, Spain and Portugal have expanded as they continue to be as popular as ever, and we are delighted to grow our programmes such as Greece, Turkey, Bulgaria, Italy and Croatia too.”

Delving into data

So does this mean it is business as usual?

John Grant, a partner at aviation data specialists OAG, admits that while geopolitical factors might be impacting long-haul travel, the short-haul market tells a different story.

He said: “There is a gravitational shift that is caused whenever there is some form of uncertainty, it almost ebbs and flows like the tide does in the Mediterranean.

“In US markets there is perhaps hesitancy about going to the eastern Med compared to the western Med given what has been going on in the last few months.”

But he adds the data shows that when it comes to the short-haul market, Turkey’s two key leisure airports in Dalaman and Antalya have apparently been largely unaffected by the Middle Eastern threat.

Dalaman will be served by 2.6 million seats this summer, a 13 per cent increase on the 2.3 million seats available last year with the three biggest international source airports being Manchester, London Gatwick and Birmingham in the UK.

Meanwhile Antalya, has seen a 1.1 per cent reduction in seats for the summer season from 8.9 million last year to 8.8 million this year with to a predominantly German market, with Dusseldorf, Cologne/Bonn and Frankfurt international airports supplying the most foreign travellers.

However, Grant believes these changes tell us more about the ongoing return to normality in a post-Covid world than any geopolitical threat.

He added: “Certainly Greece and Turkey benefited from the pandemic as they had much more liberal entry requirements than certain other destinations.”

Nor do the figures compare too badly with Palma de Mallorca airport, the fourth biggest European airport according to summer 2024’s seat schedules and the biggest leisure-focused one, which has seen a 3.9 per cent increase in seats to 14.51 million from 13.97 million last year.

This means while there may be concerns over Turkish and eastern Mediterranean tourism this summer, the airlines are largely backing the region at least in the short-haul market.

However, with the Middle East still on a knife edge, that situation could quickly change and all involved in the hospitality sector should be scanning this horizon to foretell what will happen at home this summer.