Australia’s Qantas Airways, Scandinavia’s SAS and Air Latest Zealand announced airfare hikes on Tuesday, blaming an abrupt spike in the associated fee of fuel brought on by the Middle East conflict that’s rattling the worldwide aviation sector.
Jet fuel prices, which were around $85 to $90 per barrel before U.S.-Israeli strikes on Iran, have soared to between $150 and $200, Latest Zealand’s flag carrier said because it suspended its financial outlook for 2026 because of uncertainty over the conflict.
The war, which disrupted shipping via the world’s most significant oil export route, has sent oil prices surging, upending global travel, pushing airline tickets on some routes sky-high, and sparking fears of a deep travel slump.
“Increases of this magnitude make it vital to react so as to maintain stable and reliable operations,” an SAS spokesperson said in an announcement to Reuters, adding it had implemented a “temporary price adjustment”.
The most important Scandinavian airline last 12 months temporarily adjusted its fuel hedging policy because of uncertain market conditions and said that it had no fuel consumption hedged for the next 12 months.
Several Asian and European airlines, including Lufthansa and Ryanair, have oil hedging in place, securing an element of their fuel supplies at fixed prices.
A spokesperson for Air Canada told Global News it had taken hedging positions for “a small portion of our short-term needs, to administer fuel price volatility,” and wouldn’t comment on potential future airfare hikes.
Finnair, which had hedged over 80% of its first-quarter fuel purchases, warned that even the supply of fuel might be in danger if the conflict dragged on.
“A chronic crisis could affect not only the worth of fuel but in addition its availability, at the least temporarily,” a Finnair spokesperson said, adding that this was not happening yet.
Kuwait, a serious jet fuel exporter to north-west Europe, has faced output cuts.
WestJet acknowledged fuel is the most important input cost for any airline and hinted at future airfare hikes, adding it’s going to proceed to observe the situation and “respond accordingly.”
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“The recent sharp increase because of the situation in Iran has already made operating flights costlier, based on this, it’s likely further pricing adjustments could also be needed,” a spokesperson told Global News.
AIRSPACE CHAOS IN THE MIDDLE EAST
Highlighting the airspace chaos within the Middle East, planes arriving in Dubai were briefly placed in a holding pattern on Tuesday because of a possible missile attack, flight tracking service Flightradar24 said on X. The planes eventually landed.
Qantas said along with increasing international fares, it was exploring redeploying capability to Europe as airlines and passengers seek to evade disruptions within the Middle East, where drone and missile fire have curtailed flights.
Airfares have soared on Asia-Europe routes because of airspace closures and capability constraints, and Hong Kong’s Cathay Pacific Airways 0293.HK said on Tuesday it was adding extra flights to London and Zurich in March.
Air Latest Zealand said it had raised one-way economy fares by NZ$10 ($6) on domestic routes, NZ$20 on short-haul international services and NZ$90 on long-haul, with more adjustments to prices and schedules possible if jet fuel costs remain elevated.
Hong Kong Airlines said on its website it might raise its fuel surcharges by as much as 35.2% from Thursday, with the sharpest increase on flights between Hong Kong and the Maldives, Bangladesh and Nepal.
Still, some European airlines said they saw no near-term must act yet. A spokesperson for British Airways-owner IAG ICAG.L said it was well-hedged for the immediate future and had no plans to alter ticket prices.
British Airways said on Tuesday it had brought forward the top of its winter-season flights to Abu Dhabi due to the “continuing uncertainty”, cancelling all services until near the top of the 12 months that were scheduled to run until April 11.
AIRLINE SHARES STABILISE AFTER SELLOFF
Some airline stocks rose and oil prices fell to around $90 a barrel on Tuesday from a high of $119 on Monday after U.S. President Donald Trump said on Monday the war might be over soon.
When markets opened in Europe, airline shares were up between 4% and seven%. Shares of major U.S. carriers Delta Air Lines DAL.N, United Airlines UAL.O, Southwest Airlines LUV.N and American Airlines AAL.O were down between 2% and 4% in early trading.
U.S. airlines rely less on hedging than their European and Asian rivals in managing their fuel costs, making their shares more vulnerable to grease’s volatility.
In Asia, Qantas closed 0.5% higher, Korean Air Lines 003490.KS rose 3% and Cathay Pacific 0293.HK was up 3.6%. All had recorded sharp declines on Monday.
Fuel is the second-largest expense for air carriers after labour, typically accounting for a fifth to 1 / 4 of operating expenses.
CONFLICTS SHRINKING AVAILABLE AIRSPACE
Along with high fuel costs, tightening airspace also threatens to derail the worldwide travel industry, as pilots reroute to avoid the Middle East conflict and capability on popular routes fills up.
Emirates, Qatar Airways and Etihad typically jointly account for about one-third of the passenger traffic between Europe and Asia and fly greater than half of all passengers from Europe to Australia, Latest Zealand and nearby Pacific Islands, in line with Cirium.
European airlines have already struggled with the shortage of accessible airspace created by the war in Ukraine, with many avoiding Russian airspace and flying longer international routes. Now, with even less available airspace, they are saying their business has change into even more difficult.
—With additional files from Global News