Gaza Conflict Weighs on U.S. Airlines, FAA Ban in Place - Analyst Blog


The Israel-Palestine conflict has begun to take a toll on U.S. airline companies - at least for the time being - with The Federal Aviation Administration (FAA) prohibiting them from flying to Tel Aviv for 24 hours beginning Tuesday afternoon.

The restriction was imposed after a rocket fired from the Gaza Strip landed at a distance of about one mile from Ben Gurion International Airport in Israel on Tuesday. So far, Hamas militants have fired more than 2,000 rockets toward Israel, while 609 Palestinians have lost their lives already in the deadly battle.

Delta Airline Inc. 's ( DAL ) Tel Aviv-bound flight was mid-air, when it was forced to divert The Boeing Co. 's ( BA ) 747 aircraft to Paris Charles de Gaulle airport. United Continental Holdings Inc. (UAL) has cancelled its twice daily flight to Israel from Newark, while American Airlines Group Inc. (AAL)-owned U.S. Airways has temporarily suspended its Philadelphia-Tel Aviv flight service.

Post the FAA ban, some European and Canadian carriers like Air France-KLM, Lufthansa, Swiss Air and Air Canada have cancelled flights to Tel Aviv citing safety concerns. However, international carriers like British Airways, Ukrainian International, Belavia and El Al still continue to fly to Israel.

The recent armed conflict between the Israelis and Palestinians is the third of its kind in the last five years. Moreover, the clash shows no signs of slowing down with the Hamas having rejected the latest cease fire proposal. On its part, the Israeli government has requested for the ban to be revoked immediately arguing that Ben Gurion airport is well guarded to fly safely. They believe that the flight prohibition will provide an undue advantage to the Hamas.

At present, the FAA is monitoring the situation closely, while the U.S. state department has issued a warning with regard to the ongoing conflict to its citizens travelling to the war-hit nation. Carriers adhering to the ban are currently allowing passengers a one-time change on their tickets.

Of late, air travel has been under considerable scrutiny after the recent Malaysia Airlines catastrophe, wherein Flight MH17 was reportedly hit by a surface-to-air missile which took the lives of all 298 people on board. Left with little choice, airlines are now being forced to change their routes to avoid the Ukraine skies where the government army have been battling pro-Russian separatists. We believe the flight restriction decision has been largely influenced by this recent disaster.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: UAL , AAL , BA , DAL

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