As tensions rise across the Middle East, travel agencies in Korea are scrambling to craft responses. Refund policies for Middle East tour packages are a particular problem. That is because the military confrontation between the United States and Israel on one side and Iran on the other shows signs of dragging on.
According to the travel industry on the 4th, agencies such as Hanatour and Modetour Network Inc. have not yet decided on refund policies for Middle East tour packages. Only partial policies have been set for itineraries that visit or transit through Dubai, Abu Dhabi, or Qatar. They decided to offer full refunds without fees only for departures from Mar. 8 to 10.
The issue is trips departing after that. As a rule, war is categorized as a force majeure comparable to a natural disaster, so it is not considered the travel agency's fault. Therefore, even if refunds are issued minus fees, there is no legal problem. However, a travel industry official said, "When flights are canceled or the government issues a travel ban, fee waivers for cancellations are often implemented," adding, "This is a matter of managerial judgment, nothing has been decided yet, and we are watching developments."
Typically, when war breaks out, travel demand contracts rapidly. If refunds without fees are implemented, many who were considering travel also decide to cancel, enlarging the scale of refunds and making cash flow management harder for agencies. A travel industry official said, "It takes time for recognized revenue to be reversed while expense is reflected immediately, so this poses a major management risk for small and mid-sized agencies with weaker short-term cash availability. For agencies like Hanatour or Modetour Network, it is also a headwind for short-term results."
Although the trouble is in the Middle East, demand for European travel is also expected to decline. That is because many recent Europe package products have used Middle Eastern carriers. As Middle Eastern airlines pushed sales aggressively, they allocated seats to agencies at relatively low prices.
The industry expects existing bookings to drop off and new demand to shrink. A travel agency official said, "Because 20% to 30% of Europe-bound travelers used Middle Eastern carriers with a transit itinerary, Europe routes are also likely to take a hit," adding, "Even if we switch flights, we will need to find alternative options such as rerouting air corridors, which likely increases both flight time and expense."
There is also the issue of compensation for travelers stranded in the Middle East. According to Hanatour and Modetour Network, about 300 and 240 travelers, respectively, are currently staying in Middle Eastern destinations such as Dubai and Qatar due to this situation. Considering those who traveled to the Middle East through independent travel or small agencies and became stranded, the number of tourists remaining there is expected to be higher.
For now, all of them are staying at local hotels, and discussions remain over how to handle the expense. The Dubai Department of Tourism asked hotels to support affected guests, saying "visitor safety is the top priority," but some hotels are reportedly demanding additional charges from stranded tourists.
According to aviation data company Sirium, at least 11,000 flights to and from the Middle East were canceled from Feb. 28 to Mar. 2. In Korea, the Incheon–Dubai route operated by Korean Air Lines has been fully canceled through the 8th. Qatar Airways, Emirates, and Etihad Airways also canceled all flights to and from Doha, Dubai, and Abu Dhabi, respectively, with the closure of airspace.