West Asia airspace closures weigh on travel, but demand holds

PETALING JAYA: Malaysia’s tourism players are only now beginning to feel the knock-on effects of West Asia’s airspace closures, with May shaping up to be the first clear test after being relatively steady in March and April.

While hotels and tour operators report softer pickup and some cancellations tied to the West Asia conflict, the broader picture suggests travellers are delaying plans rather than abandoning them altogether, keeping medium-term demand intact.

Further, the impacts of airspace closures and flight suspensions in the region indicated that most hospitality operators are facing a slower month‑on‑month pickup.

“The effect was not immediate. March occupancy held up for us, with no noticeable decline linked to the airspace closures in West Asia. The real impact is from May onwards,” Park Royal Langkawi general manager Au Yong Hin Yoong told SunBiz.

He said the current softer pace has placed the hotel slightly below last year’s performance, which the hotel sees as having clearer movement in the guest mix.

“March and April recorded some cancellations with guests citing the conflict as the reason. We noted a reduction in arrivals from both the Middle East and certain European connecting markets.”

When asked about rising fuel and energy costs due to oil price spikes and cost-cutting measures in operations to protect margins, Au Yong said Park Royal Langkawi has not made any major operational changes at this stage.

“Our priority remains to uphold service quality and ensure guest satisfaction is never compromised. What we are doing is reinforcing cost discipline – tightening expense management, reviewing non‑essential spending, and preparing a structured austerity framework should the situation persist.

“Our approach focuses on smarter resource allocation and operational efficiency, particularly in areas such as payroll, energy usage, and variable expenses. This allows us to protect margins responsibly while maintaining the high standards our guests expect,“ Au Yong said.

Elaborating on contingency measures to counter prolonged disruptions, he said Park Royal Langkawi’s contingency planning focuses on strengthening demand in the Asia Pacific, the domestic market, and the Commonwealth of Independent States region.

“Rather than relying solely on rate reductions, we are prioritising value‑added packages that elevate the overall stay experience and deliver stronger value for money. In parallel, we are adopting a more flexible pricing strategy for MICE groups to stay competitive and responsive to shifting corporate travel budgets.

“This balanced approach enables us to stimulate both leisure and group demand while maintaining rate integrity,“ Au Yong said.

Tour operator Asian Trails Malaysia and Singapore managing director Emir Cherif said the company is experienced a notable volume of cancellations in March and April, primarily among clients travelling on Middle Eastern carriers.

He said rebooking proved challenging due to severely limited availability and significantly elevated fares on alternative carriers such as Malaysia Airlines, Singapore Airlines, KLM, British Airways, and Turkish Airlines.

“Despite this, the majority of our clients were fortunately already ticketed on unaffected airlines and proceeded with their trips as planned. Looking ahead, demand remains healthy for our high season (July–September) and the fourth quarter, and we are seeing stronger-than-usual forward bookings for next year – a clear signal that travellers are deferring rather than cancelling, which gives us confidence in the medium-term recovery,“ he added.

Emir said at the current stage, the company have not found it necessary to reallocate resources, as forward demand remains robust enough to sustain normal operations across all teams.

“On the cost side, we acknowledge that supplier rate increases driven by fuel surcharges are justified under current market conditions. Our priority is to absorb or minimise these increases wherever possible to protect our destination’s price competitiveness.

“That said, we have introduced a fuel surcharge specifically for transportation services, applicable to new bookings only and strictly temporary – it will be lifted as soon as fuel prices normalise.”

Further, Emir said India remains a key focus market and represents a significant share of the company’s business.

However, he said it is also a highly price-sensitive segment, and the sharp rise in airfares has dampened short-term conversion, making it more challenging.

“Looking at mid-term booking windows, airfares have only marginally increased. Beyond India, our strategy centres on deepening engagement with our existing core markets, with an emphasis on securing future-dated business.

“While the near-term pipeline from affected corridors remains under pressure, the volume of deferred bookings suggests that underlying demand is intact and will convert once pricing stabilises,“ Emir said.

For now, operators are holding their ground – tightening costs, refining pricing strategies and leaning on regional markets to cushion the dip.

The near term may remain uneven as flight disruptions and higher fares weigh on sentiment, but industry players say forward bookings and deferred travel plans point to a recovery once conditions stabilise.