Airlines cut flights and hike fares as fuel prices surge

Airlines cut flights and hike fares as fuel prices surge

Global airlines face rising costs and operational adjustments

Jet fuel prices have reached record levels, prompting airlines such as Air India and Air New Zealand to reduce flight schedules and raise ticket prices. The conflict between the US and Israel over Iran has significantly impacted fuel costs, which typically account for 20-40% of airline expenses. Recent data shows European jet fuel prices climbed to $1,838 per tonne, a sharp increase from $831 prior to the escalation.

Supply chain vulnerabilities in the Gulf region

The Gulf serves as a critical hub for aviation fuel, supplying nearly half of Europe’s needs. Most of this fuel transits through the Strait of Hormuz, which has been closed by Iran in response to attacks. This disruption has intensified reliance on Middle Eastern refineries, with the Al-Zour refinery in Kuwait alone contributing about 10% of Europe’s imports, as noted by Energy Intelligence.

Regional impacts and varied responses

Air New Zealand anticipates cancellations on major routes connecting Auckland, Wellington, and Christchurch, though smaller airports remain unaffected. The airline, which already trimmed services last month, is offering alternatives to most impacted passengers. “Jet fuel prices are now over double the usual rate,” stated a spokesperson, highlighting the financial strain. In Asia, carriers like China Eastern and Korean Air have also adopted emergency measures, including fare hikes and operational cuts.

Analyst perspectives on ongoing challenges

Industry experts warn that higher fares and cancellations will persist as the conflict continues. Mick Strautmann of Vortexa explained,

“Starting from an already tight market, the current lack of Middle East jet fuel exports is worsening the situation. Given global jet fuel exports are at their lowest in four years, the same level of air travel demand will likely not be sustainable if disruptions persist. Airlines will then need to raise prices further and reduce flights.”

Meanwhile, George Shaw of Kpler noted that Europe is not yet facing shortages, citing domestic production and manageable April stocks. He added,

“There may be some localised issues in May as the drop in imports becomes more pronounced.”