Australia’s Qantas Airways, Scandinavia’s SAS and Air New Zealand have announced increases in airfares, blaming a sharp rise in fuel costs caused by the US and Israeli attack on Iran that is shaking the global aviation sector.
Jet fuel prices, which hovered between $85 and $90 a barrel before the attack on Iran, have soared to between $150 and $200, New Zealand’s flag carrier said on Tuesday, suspending its 2026 financial outlook due to uncertainty over the conflict.
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The war, which disrupted shipping along the world’s most important oil export route, has sent oil prices soaring, disrupting global travel, sending airline ticket prices through the roof on some routes and raising fears of a deep slump in travel.
“Increases of this magnitude make it necessary to react to maintain stable and reliable operations,” a SAS spokesperson said in a statement to Reuters, adding that it had implemented a “temporary price adjustment.”
Last year, Scandinavia’s largest airline temporarily adjusted its fuel hedging policy due to uncertain market conditions and said it did not have any fuel consumption hedged for the next 12 months.
Several Asian and European airlines, including Lufthansa and Ryanair, have oil coverage, securing a portion of their fuel supplies at fixed prices.
Finnair, which had covered more than 80 percent of its fuel purchases in the first quarter, warned that even fuel availability 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 is not happening yet.
Kuwait, a major exporter of jet fuel to northwest Europe, has faced production cuts.
Chaos in airspace
Highlighting the airspace chaos in the Middle East, planes arriving in Dubai were briefly placed in a holding pattern on Tuesday due to a possible missile attack, flight tracking service Flightradar24 said in X. The planes eventually landed.
Qantas said that in addition to increasing international fares, it was exploring the possibility of redeploying capacity to Europe as airlines and passengers seek to evade disruptions in the Middle East, where drone and missile attacks have restricted 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 would add additional flights to London and Zurich in March.
Air New Zealand said it had increased one-way economy fares by NZ$10 ($6) on domestic routes, NZ$20 ($12) on short-haul international services and NZ$90 ($53) on long-haul routes, with further price and schedule adjustments possible if jet fuel costs remain high.
Hong Kong Airlines said on its website that it would increase its fuel surcharges by up to 35.2 percent from Thursday, with the steepest increase on flights between Hong Kong and the Maldives, Bangladesh and Nepal.
Still, some European airlines said they saw no need to act in the short term yet. A spokesman for IAG, which owns British Airways, said it was well covered for the immediate future and had no plans to change ticket prices.
British Airways said on Tuesday it had brought forward the end of its winter season flights to Abu Dhabi due to “continued uncertainty”, canceling until near the end of the year all services that were scheduled to run until April 11.
Airline stocks stabilize
Shares of some airlines rose and oil prices fell to around $90 a barrel on Tuesday from a high of $119 on Monday after US President Donald Trump said on Monday that the war could end soon.
When markets opened in Europe, airline stocks rose 4 to 7 percent. Shares of major US airlines Delta Air Lines, United Airlines, Southwest Airlines and American Airlines fell 2 to 4 percent in early trading.
U.S. airlines rely less on hedging than their European and Asian rivals to manage their fuel costs, making their stocks more vulnerable to oil volatility.
In Asia, Qantas closed up 0.5 percent, Korean Air Lines rose 3 percent and Cathay Pacific rose 3.6 percent. All had recorded sharp falls on Monday.
Fuel is the second largest expense for airlines after labor and typically accounts for between a fifth and a quarter of operating expenses.
Increasingly reduced airspace
In addition to high fuel costs, restricted airspace also threatens to derail the global travel industry, as pilots are diverted to avoid the Middle East conflict and capacity on popular routes fills up.
Emirates, Qatar Airways and Etihad together typically account for about a third of 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.
European airlines have already struggled with a shortage of available airspace created by the war in Ukraine, with many avoiding Russian airspace and flying longer international routes. Now, with even less airspace available, they say their business has become even more challenging.
