Australia’s Qantas Airways, Scandinavia’s SAS and Air New Zealand have announced airfare hikes, blaming an abrupt spike in the cost of fuel caused by the US-Israel attack on Iran that is rattling the global aviation sector.
Jet fuel prices, which were around $85 to $90 per barrel before the attack on Iran, have soared to between $150 and $200, New Zealand’s flag carrier said on Tuesday as it suspended its financial outlook for 2026 due to uncertainty over the conflict.
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The war, which disrupted shipping via the world’s most vital oil export route, has sent oil prices surging, upending global travel, pushing airline ticket prices on some routes sky-high, and sparking fears of a deep travel slump.
“Increases of this magnitude make it necessary to react in order to maintain stable and reliable operations,” an SAS spokesperson said in a statement to Reuters, adding it had implemented a “temporary price adjustment”.
The largest Scandinavian airline last year temporarily adjusted its fuel hedging policy due to uncertain market conditions and said that it had no fuel consumption hedged for the following 12 months.
Several Asian and European airlines, including Lufthansa and Ryanair, have oil hedging in place, securing a part of their fuel supplies at fixed prices.
Finnair, which had hedged over 80 percent of its first-quarter fuel purchases, warned that even the availability of fuel could be at risk if the conflict dragged on.
“A prolonged crisis could affect not only the price of fuel, but also its availability, at least temporarily,” a Finnair spokesperson said, adding that this was not happening yet.
Kuwait, a major jet fuel exporter to northwest Europe, has faced output cuts.
Airspace chaos
Highlighting the airspace chaos in the Middle East, planes arriving in Dubai were briefly placed in a holding pattern on Tuesday due to a potential missile attack, flight tracking service Flightradar24 said on X. The planes eventually landed.
Qantas said in addition to increasing international fares, it was exploring redeploying capacity to Europe as airlines and passengers seek to evade disruptions in the Middle East, where drone and missile fire have curtailed flights.
Airfares have soared on Asia-Europe routes due to airspace closures and capacity constraints, and Hong Kong’s Cathay Pacific Airways said on Tuesday it was adding extra flights to London and Zurich in March.
Air New Zealand said it had raised one-way economy fares by 10 New Zealand dollars ($6) on domestic routes, 20 New Zealand dollars ($12) on short-haul international services and 90 New Zealand dollars ($53) on long-haul ones, with more adjustments to prices and schedules possible if jet fuel costs remain elevated.
Hong Kong Airlines said on its website that it would raise its fuel surcharges by up to 35.2 percent 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 need to act yet. A spokesperson for British Airways owner IAG said it was well-hedged for the immediate future and had no plans to change ticket prices.
British Airways said on Tuesday that it had brought forward the end of its winter-season flights to Abu Dhabi because of the “continuing uncertainty”, cancelling all services until near the end of the year that were scheduled to run until April 11.
Airline stocks stabilise
Some airline stocks rose and oil prices fell to around $90 a barrel on Tuesday from a high of $119 on Monday after United States President Donald Trump said on Monday that the war could be over soon.
When markets opened in Europe, airline shares were up between 4 percent and 7 percent. Shares of major US carriers Delta Air Lines, United Airlines, Southwest Airlines and American Airlines were down between 2 percent and 4 percent in early trading.
US airlines rely less on hedging than their European and Asian rivals in managing their fuel costs, making their shares more vulnerable to oil’s volatility.
In Asia, Qantas closed 0.5 percent higher, Korean Air Lines rose 3 percent and Cathay Pacific was up 3.6 percent. All had recorded sharp declines on Monday.
Fuel is the second-largest expense for air carriers after labour, typically accounting for a fifth to a quarter of operating expenses.
Shrinking airspace
In addition to high fuel costs, tightening airspace also threatens to derail the global travel industry, as pilots reroute to avoid the Middle East conflict and capacity 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 more than half of all passengers from Europe to Australia, New Zealand and nearby Pacific Islands, according to Cirium.
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