Carriers including Air India and Air New Zealand have already announced measures to cushion the impact, with both airlines reducing flight capacity and adjusting fare structures in response to soaring fuel expenses.
Jet fuel, which typically accounts for between 20% and 40% of an airline’s operating costs, has seen unprecedented price increases. The benchmark European jet fuel price recently climbed to a record $1,838 per tonne—more than double the $831 level recorded before the outbreak of the US-Israeli war with Iran.
Supply Shock from the Middle East
At the heart of the crisis is a disruption in fuel supply from the Gulf region, which provides roughly half of Europe’s jet fuel imports. Much of this supply flows through the strategically critical Strait of Hormuz—a route now effectively restricted following Iran’s response to US and Israeli military actions.
The disruption has highlighted the aviation sector’s reliance on Middle Eastern refining capacity. Facilities such as the Al-Zour refinery, which alone contributes about 10% of Europe’s jet fuel imports, have become central to global supply concerns.
Airlines Respond with Cuts and Surcharges
In response, Air New Zealand has announced cancellations affecting routes linked to major hubs including Auckland, Wellington, and Christchurch. The airline noted that most affected passengers are being rebooked on alternative same-day flights, but warned that fuel costs are now more than double typical levels.
Meanwhile, Air India is restructuring its pricing model by shifting from a flat fuel surcharge to a distance-based system for domestic routes, while also increasing charges on international tickets. The airline described the current environment as one of the most challenging in recent years.
Other major carriers are taking similar steps. China Eastern Airlines has raised domestic surcharges, while Korean Air has moved into emergency management mode to navigate the crisis.
In the United States and Europe, United Airlines and Scandinavian Airlines have begun cutting flights and raising fares. Air France-KLM plans to increase long-haul ticket prices, while Cathay Pacific is adjusting its fuel surcharges upward.
Some airlines, including International Airlines Group and EasyJet, have so far avoided immediate fare hikes thanks to pre-existing fuel hedging arrangements that locked in lower prices before the conflict escalated.
However, industry warnings suggest this buffer may be temporary. Michael O'Leary of Ryanair has cautioned that supply disruptions could begin to bite as early as May if the situation persists.
Asia and Europe Face Growing Pressure
The impact is being felt most acutely in Asia, where major economies such as Japan and South Korea rely heavily on energy imports from the Middle East.
Analysts warn that the combination of high demand and reduced fuel availability is creating a difficult balancing act for airlines. With global jet fuel exports already at their lowest levels in four years, carriers may have little choice but to continue raising fares and cutting capacity.
According to industry experts, the situation could worsen as the peak summer travel season approaches in many regions. While Europe is not yet facing immediate shortages—thanks in part to domestic production—localized supply constraints could emerge in the coming months as reduced imports begin to take effect.
Outlook: Higher Fares, Fewer Flights
The broader outlook for travelers is increasingly clear: higher ticket prices and reduced flight availability are likely to persist if the conflict continues to disrupt fuel supply chains.
Although a full-scale shortage is not imminent, the current strain on global aviation fuel markets is already reshaping airline strategies—and passenger expectations—worldwide.