Airlines Respond to Rising Jet Fuel Costs
Air India and Air New Zealand have announced reductions in flight schedules and increases in fares as jet fuel prices surge, a consequence of the ongoing US-Israeli conflict with Iran.
Globally, many airlines are implementing emergency measures to mitigate the impact of rising fuel costs, which typically constitute 20-40% of their operating expenses.
Last week, the benchmark European jet fuel price reached a record high of $1,838 (£1,387) per tonne, compared to $831 before the conflict began.
Industry analysts have cautioned travelers to anticipate further increases in ticket prices and additional flight cancellations as the conflict persists.
Impact of Middle Eastern Supply Disruptions
The Gulf region is a significant source of aviation fuel, supplying approximately 50% of Europe’s imports. Most of this fuel passes through the Strait of Hormuz, which Iran has effectively closed in response to US and Israeli military actions.
The surge in jet fuel prices underscores the critical role Middle Eastern refineries play in global supplies. For instance, the Al-Zour refinery in Kuwait alone accounts for roughly 10% of Europe’s jet fuel imports, according to Energy Intelligence.
Air New Zealand Flight Cancellations
Air New Zealand’s flight cancellations are expected to affect routes in and out of Auckland, Wellington, and Christchurch, while flights to smaller airports remain unaffected.
The airline, which had already reduced some flights last month, stated on Tuesday that the
"vast majority" of customers affected by the cancellations were being offered alternative flights on the same day.
A spokesperson commented,
"Like airlines globally, we're experiencing jet fuel prices that are more than double what they would usually be."
Air India Adjusts Fuel Surcharges
Meanwhile, Air India announced it will revise the fuel surcharge on domestic flights from a flat fee to a distance-based charge.
The airline also increased surcharges for international flights, citing
"one of the most challenging fuel cost environments that airlines globally have faced in recent years."
Regional and Global Airline Responses
Many Asian airlines have been reducing services and raising fares to manage the situation. Major economies such as Japan and South Korea have been particularly impacted due to their heavy reliance on Middle Eastern energy supplies.
Last week, China Eastern Airlines announced an increase in surcharges for domestic flights, while Korean Air declared it was entering emergency management mode.
Globally, airlines have taken similar actions. United Airlines in the US and Scandinavia's SAS have cut flights and increased ticket prices.
Air France-KLM plans to raise fares for long-haul journeys, and Cathay Pacific is increasing its fuel surcharge.
British Airways owner IAG and EasyJet have so far avoided fare hikes and surcharge increases, as they secured fuel at prices fixed before the conflict began.
However, Ryanair's Michael O'Leary warned on last week that jet fuel supplies could face disruptions starting in May if the conflict continues.
Analyst Perspectives on Market Outlook
Analysts have indicated that rising ticket prices and flight cancellations are likely to persist.
Mick Strautmann, an analyst at data firm Vortexa, stated,
"Starting from an already tight market, the current lack of Middle East jet fuel exports is worsening the situation."
He added,
"Given global jet fuel exports are currently at their lowest point in four years, the same level of air travel demand will likely not be sustainable if disruptions persist, meaning airlines will likely have to increase prices further, and reduce the number of flights."
Strautmann further noted that these developments will become
"more and more likely" as the peak summer travel season approaches in many parts of the world.
Despite supply tightness, George Shaw, senior insight analyst at trade intelligence firm Kpler, indicated that shortages are not imminent.
He explained,
"Europe is not close to running out, as jet fuel is produced domestically and generally April should be manageable in terms of stocks."However, he cautioned that there may be
"some localised issues" in May as the reduction in imports is "more keenly felt."




