A rise in jet fuel prices due to the U. S.-Israeli conflict with Iran has significantly affected the global aviation industry, leading to higher ticket prices and changes in financial forecasts for airlines. Jet fuel prices increased from $85 to $90 per barrel to between $150 and $200 per barrel recently, impacting airlines where fuel can account for up to 25% of operating costs.
Airlines are responding in various ways. Aegean Airlines expects a “notable impact” on its first-quarter results due to halted Middle East flights and increased fuel costs. Air France-KLM plans to raise long-haul ticket prices by 50 euros ($57) to offset fuel expenses. Air New Zealand announced price increases on March 10 and suspended its earnings forecast because of market instability. Akasa Air introduced a fuel surcharge of 199 to 1,300 Indian rupees ($2 to $14) on domestic and international flights. American Airlines expects its first-quarter expenses to rise by $400 million because of soaring fuel prices.
Cathay Pacific will significantly increase its fuel surcharge by 34% starting April 1 and will review these rates bi-weekly. Cebu Air is closely monitoring fuel prices and its pricing strategies. EasyJet forecasts higher ticket prices later in the summer as their fuel hedges expire. Frontier Airlines is reevaluating its full-year forecast due to rising fuel expenses. Hong Kong Airlines will increase fuel surcharges by up to 35% from March 12, with notable increases on certain routes.
IAG, owner of British Airways, stated it would not raise prices immediately due to hedged fuel costs. Indigo announced the introduction of fuel charges starting March 14, with specific surcharges for Middle Eastern and European routes. JetBlue is increasing fees for optional services in response to rising operating costs, while Korean Air will begin emergency management measures in April to cope with the rising oil prices. Pakistan International Airlines plans to increase domestic fares by $20 and international fares by up to $100.
SAS will cancel around 1,000 flights in April and noted that even after raising prices, the costs still hurt the airline industry. Spring Airlines will raise fuel surcharges for domestic flights starting April 5. Thai Airways announced a fare increase of 10% to 15% because of higher fuel expenses. Turkish Airlines and Lufthansa’s joint venture, SunExpress, will apply a temporary fuel surcharge starting May 1 for Europe-bound flights from Turkey.
United Airlines is cutting unprofitable flights as it anticipates oil prices will remain high through the end of 2027, with fare increases not significantly harming bookings. VietJet has adjusted flight schedules due to potential fuel shortages. Vietnam Airlines plans to cancel 23 domestic flights each week from April and has sought government assistance to eliminate an environmental tax on jet fuel. Virgin Australia is adjusting fares to reflect cost pressures from the Middle Eastern situation. Greater Bay Airlines will raise fuel surcharges on most routes starting April 1, while keeping rates unchanged for mainland China and Japan routes.
With information from Reuters
