Airlines cut flights and hike fares as fuel prices surge
Airlines cut flights and hike fares as fuel prices surge
Fuel Price Surge and Global Impact
Jet fuel costs have skyrocketed, prompting airlines worldwide to reduce services and raise prices. Air India and Air New Zealand are among carriers adjusting schedules and ticket prices, driven by the escalating conflict between the US and Israel in the Persian Gulf. The European benchmark for jet fuel reached $1,838 per tonne last week, a sharp increase from $831 prior to the war. This surge has forced carriers to reevaluate their operations, with analysts predicting ongoing adjustments in both fares and flight availability.
Supply Chain Disruptions in the Middle East
The Middle East remains a critical supplier of aviation fuel, contributing approximately 50% of Europe’s imports. However, the Strait of Hormuz—key to these shipments—has been closed by Iran in response to US and Israeli strikes. This has disrupted supply chains, amplifying costs for airlines reliant on Middle Eastern refineries. Energy Intelligence notes that the Kuwaiti Al-Zour refinery alone accounts for about 10% of Europe’s jet fuel supply, underscoring the region’s strategic importance.
Airlines Adjust Strategies to Cope with Costs
Carriers like Air New Zealand are cutting routes from major hubs such as Auckland, Wellington, and Christchurch, though smaller airports remain unaffected. The airline reassured passengers that most disrupted flights would have alternatives offered on the same day. Air India, meanwhile, is shifting its domestic fuel surcharge from a fixed rate to one tied to flight distance. International fares are also rising, reflecting the “challenging fuel cost environment” described by the airline.
Global Responses to Rising Fuel Costs
From Asia to the Americas, airlines are implementing measures to manage rising expenses. In Japan and South Korea, disruptions have been particularly severe due to heavy dependence on Middle Eastern energy sources. China Eastern Airlines raised domestic surcharges, while Korean Air entered emergency management mode. In the US and Scandinavia, United Airlines and SAS have also scaled back operations and increased pricing. Air France-KLM and Cathay Pacific are adjusting long-haul fares and surcharges, respectively.
Persistent Challenges Ahead
Despite current stock levels, analysts warn of potential shortages as the conflict continues. Ryanair’s Michael O’Leary suggested May could bring supply disruptions, according to Sky News. Mick Strautmann of Vortexa noted that “global jet fuel exports are at their lowest in four years,” compounding demand pressures. While Europe is not facing immediate shortages, George Shaw of Kpler highlighted possible “localised issues” in May as imports decline. This could lead to further fare hikes and flight reductions, especially as summer travel demand peaks.