By Julie Zhu, Joanna Plucinska and Federico Maccioni
LONDON/DUBAI/HONG KONG, March 4 (Reuters) - A handful of repatriation flights were due to take off from the Middle East on Wednesday as governments try to bring tens of thousands of stranded citizens home, while the selloff in global airline shares eased even as the U.S. and Israeli air war against Iran escalated.
The airspace over most of the Middle East remained largely empty on Wednesday, with major Gulf hubs including Dubai, the world's busiest
international airport, remained shut for a fifth day, in the biggest travel crisis since the COVID-19 pandemic.
The first repatriation flights were due to leave for Britain and France on Wednesday and the United Arab Emirates opened special corridors to allow some citizens to return.
This contrasts with the thousands of flights that take off in the region normally. Marooned tourists and some expatriates have also tried to find their own way out.
Airline shares were finding some stability after double-digit percentage drops in the past few days, wiping tens of billions of dollars from airlines' market value.
Lufthansa was down 0.8% and Qantas was 2.7% lower - both have lost more than 10% of their value this week so far, their worst week in almost a year. BA-owner ICAG was down 1.5%, having fallen more than 11% in the past three days.
The Gulf is also a major hub for air cargo, putting further pressure on international trade routes.
Airline executives have said that crew and pilots are now scattered across the world, complicating the process of resuming flights when airspace reopens. Soaring prices of oil will also add to carriers' costs.
"If the airspace closure becomes the norm, it will also make Asia-Europe flights more expensive as flights will need to reroute," Natixis said in a research report on Wednesday.
"The limited option to travel will also reduce affluent Middle Eastern tourist spending in Asia."
ASIAN AIRLINE STOCKS
Most Asian airline shares pared losses from earlier this week. Korean Air Lines shares fell 7.9%, after dropping 10.3% on Tuesday.
"It is just a different market reaction time as many European airlines have already reacted more since the war started," said Gary Ng, a senior economist at Natixis.
"As the market prices in a longer-duration war with higher energy prices and weaker currencies, it affects the whole sector broadly including APAC airlines."
South Korea's stock market was closed on Monday when most airline and travel stocks bore the brunt of the impact from the conflict.
Japan Airlines stock fell 2.9% on Wednesday, after losses of 6.4% on Tuesday.
Major Chinese carriers Air China, and China Southern Airlines, closed down between 1% and 3%.
(Reporting by Julie Zhu in Hong Kong, Alessandro Parodi in Gdansk, Lucy Craymer and Federico Maccioni in Dubai, Roushni Nair in Bengaluru, Li Gu in Shanghai.Writing by Joanna Plucinska.Editing by Josephine Mason and Jane Merriman)
