Airlines flag higher ticket prices as fuel costs take toll

SINGAPORE - Australia’s Qantas Airways and Air New Zealand said on March 10 they are hiking fares due to the Middle East conflict, underscoring how global airlines are struggling to cope with the sudden and soaring costs of fuel.

Jet fuel prices, which were around US$85 (S$108) to US$90 per barrel prior to the conflict, have increased sharply to between US$150 and US$200 per barrel in recent days, New Zealand’s flag carrier said, as it suspended its financial outlook for 2026 due to uncertainty over the conflict.

The US-Israeli war on Iran has sent oil prices surging, upending global travel and sparking fears of a deep travel slump and the potential for the widespread grounding of planes.

Highlighting the chaos around Middle Eastern airspace, planes arriving into Dubai were briefly placed in a holding pattern on the morning of March 10 due to a potential missile attack, flight tracking service Flightradar24 said on X.

The planes eventually landed.

Qantas said that in addition to increasing international fares, it was exploring options to redeploy capacity to Europe as airlines and passengers seek to evade disruptions in the Middle East, where drone and missile fire have curtailed flights.

The Australian airline said its flights to Europe are more than 90 per cent full in March, compared to the usual 75 per cent at this time of year.

Airfares have soared on Asia-Europe routes due to airspace closures and capacity constraints, and Hong Kong’s Cathay Pacific Airways said on March 10 it was adding extra flights to London and Zurich in March.

Air New Zealand said it had raised one-way economy fares by NZ$10 (S$7.50) on domestic routes, NZ$20 on short-haul international services and NZ$90 on long-haul flights, with further price, network and schedule changes possible if jet fuel costs remain elevated.

Hong Kong Airlines said on its website it would raise its fuel surcharges by up to 35.2 per cent from March 12, with the sharpest increase on flights between Hong Kong and the Maldives, Bangladesh and Nepal where charges will rise to HK$384 (S$62.37) from HK$284.

Cathay Pacific said it reviewed its fuel surcharges on a monthly basis.

It kept them flat in January at US$72.90 each way on flights between Hong Kong and Europe and North America before the conflict began.

Vietnam Airlines has asked the local authorities to remove an environment tax on jet fuel to help it maintain operations.

The South-east Asian nation’s government said Vietnamese airlines’ operating costs have risen 60 per cent to 70 per cent due to the rise in jet fuel prices and fuel suppliers were facing difficulties in meeting airline demand.

Airline shares stabilise after selloff

In a move that lifted some airline stocks, US President Donald Trump said on March 9 the war could be over soon, sending oil prices down to around US$90 a barrel on March 10 from a high of US$119 on March 9.

In Asia, airline shares showed signs of stabilising, with Qantas up 0.5 per cent, Korean Air Lines rising nearly 9 per cent and Cathay Pacific up more than 4 per cent. All had recorded sharp drops on March 9.

Fuel is the second-largest expense for air carriers after labour, typically accounting for a fifth to a quarter of operating expenses.

Some major Asian and European airlines have oil hedging in place, but US airlines largely stopped the practice over the last two decades.

Conflict takes toll on travel industry

High fuel prices could have severe implications for the global travel industry, with airlines already navigating tight airspace as pilots reroute to avoid the Middle East conflict and capacity on popular routes fills up.

Combined, Emirates, Qatar Airways and Etihad normally fly about one-third of the passengers from Europe to Asia and more than half of all passengers from Europe to Australia, New Zealand and nearby Pacific Islands, according to Cirium.

South Korea’s HanaTour Service said it has been cancelling group tours that include flights to the Middle East, such as travel to Dubai or itineraries transiting through Dubai en route to Europe, and it is waiving cancellation fees for affected customers.

All Middle East-related tours for March will be suspended, it added.

In Thailand, the Ministry of Tourism forecast that if the conflict drags on for more than eight weeks, the country will lose a total of 595,974 tourists and 40.9 billion baht (S$1.64 billion) in tourism revenue. REUTERS