Shares in Virgin Australia Holdings Ltd (ASX: VGN) are heading south on Monday. This comes as the airline faces fresh pressure linked to the ongoing war across the Middle East.
At the time of writing, the Virgin Australia share price is down 2.56% to $2.66. The stock has had a difficult run recently and is now down about 24% since the start of 2026.
Here's what investors need to know.
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Middle East conflict disrupts flights
According to The Australian, Virgin Australia's partnership with Qatar Airways is being tested as the conflict in the Middle East continues to affect aviation routes.
Qatar Airways currently owns 25% of Virgin Australia and provides aircraft and crew for several services under a wet lease arrangement.
However, the Gulf carrier has reportedly cancelled all of the wet lease flights it operates on behalf of Virgin while the conflict continues.
As a result, daily services from Sydney, Brisbane, Perth, and Melbourne to Doha have not been operating since fighting escalated in the region. Virgin has extended cancellations through to at least Thursday.
These routes form a key part of Virgin's strategy to expand its international network following its return to the ASX in 2025.
Qatar Airways hit hardest by cancellations
Data from aviation analytics firm Cirium show that Qatar Airways has been the airline most affected in the Gulf region since the conflict intensified.
The data shows 2,479 flight cancellations out of 2,669 scheduled services, impacting an estimated 741,000 travellers.
The situation has also affected airline operations across the wider region.
Between February 28 and March 13, more than 52,000 flights were cancelled, affecting an estimated 6 million passengers.
Several airlines are now operating under restricted schedules while governments review airspace safety conditions.
Virgin Australia share price under pressure
The latest developments appear to be weighing on investor sentiment toward Virgin Australia shares.
The airline's stock has fallen roughly 19% since early March, leaving it well below the levels seen shortly after its relisting last year.
Virgin Australia returned to the ASX in June 2025, when private equity owner Bain Capital sold a 30% stake to investors at $2.90 per share.
Today's price of $2.66 puts the stock below that listing level.
By comparison, rival Qantas Airways Ltd (ASX: QAN) has also declined recently, although the pullback has been smaller.
Travel demand shifting
Despite the disruption to Middle East travel routes, broader demand for flights appears to remain resilient.
Online travel group Webjet Group Ltd (ASX: WJL) said booking data shows travellers are increasingly shifting toward destinations closer to home.
Bookings to locations such as Ho Chi Minh City, Bali, Tokyo, and Manila have been rising, while domestic destinations, including the Gold Coast, are also seeing increased interest.
This suggests that while geopolitical tensions may temporarily affect certain routes, overall travel demand remains relatively strong.
However, the near-term focus will likely remain on managing operational issues linked to its international partnership network.
