Emirates insurance plan could usher in more travel incentives

• Protection from future conflict disruption
• Airline to guarantee journey home
• Etihad offering free medical insurance

Emirates is considering a passenger protection insurance product for travellers affected by future regional conflicts.

Analysts believe the move could be adopted more widely as the aviation industry seeks to rebuild confidence after the Iran war.

Emirates president Tim Clark unveiled the proposal at an event in Berlin this week, including plans to offer passengers insurance cover, separate from traditional travel insurance, in the event that hostilities resume and regional airspace closures disrupt travel.

According to the Financial Times, Clark said Emirates is working with insurance providers on what he described as a “reasonably priced” product that would guarantee passengers a journey back to their original destination, whether on Emirates or another carrier.

“I think one of the big concerns is that if they get caught overseas, they can’t get back,” Clark was quoted as saying.

Thousands of passengers travelling to, from and through Dubai were stranded when the conflict began in February, prompting the closure of airspace across much of the Gulf. Emirates arranged accommodation for affected travellers across the city and restored operations to around 40 percent of capacity within days.

The airline, which reported record annual profits in May, has since rebuilt its network to about 80 percent of pre-conflict capacity, despite many governments continuing to advise against travel to the region.

“Certainly this is a novel approach by Emirates to instil confidence in passengers,” said Saj Ahmad, chief analyst at StrategicAero Research. “It sends a message that Emirates is operating as normally and safely as possible and that, despite the regional conflict, the airline views the current environment as the new normal.”

Unlike the Covid-19 pandemic, which brought global travel to a halt through border closures, testing requirements and quarantine restrictions, today’s crisis is largely centred on perception and risk. Some insurers have stopped offering cover for travel through parts of the Gulf, creating additional uncertainty for passengers considering trips through major hubs such as Dubai.

“People are looking for ways to de-risk their journeys,” Ahmad said. “Some travellers are avoiding Dubai because they are concerned about the conflict spreading, becoming stranded or facing unexpected accommodation costs if flights are disrupted.”

Airlines in the Middle East are predicted to swing from a $7.2 billion profit in 2025 to a $4.3 billion loss this year as a result of the conflict, according to the latest forecast from the International Air Transport Association.

• Emirates posts bumper profit despite war disruption
• Emirates cuts June schedule by half a million seats
• Mena airlines brace for tougher test in drawn-out conflict

On Friday, it was announced that Abu Dhabi carrier Etihad Airways had partnered with the emirate’s tourism authority to launch free medical travel insurance for international travellers flying to the UAE capital.

Valid from July through to December the insurance is underwritten and administered by The National Insurance Company Daman and covers visitors for up to 15 days in the UAE.

John Grant, partner at Midas Aviation and an AGBI columnist, believes Emirates and Etihad are unlikely to be alone in exploring creative incentives.

“This is one of many such ideas and offers that we will see as airlines seek to rebuild their business,” he said.

He expects carriers to introduce a range of promotions, including complimentary airport transfers, free hotel nights, room upgrades, duty-free discounts and destination experiences as they compete for returning travellers.