Airline ticket prices jump worldwide after fuel price shock

Australia's Qantas Airways QAN.AX, Scandinavia's SAS and Air New Zealand AIR.NZ announced airfare hikes on Tuesday, blaming an abrupt spike in the cost of fuel caused by the Middle East conflict.

Jet fuel prices, which were around $85 to $90 per barrel before U.S.-Israeli strikes on Iran, have soared to between $150 and $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 war, which disrupted shipping via the world's most vital oil export ​route, has sent oil prices surging, upending global travel, pushing airline tickets on some routes sky-high, and sparking fears of a deep travel slump that could lead to widespread grounding of planes.

"Increases of this magnitude make it necessary to react in order to maintain stable and reliable operations," an SAS spokesperson said in a statement to Reuters, adding it had implemented a "temporary price adjustment".

The largest Scandinavian airline said last year it had temporarily adjusted its fuel hedging policy due to uncertain market conditions and that it had no fuel consumption hedged for the following 12 months.

Several Asian and European airlines, including Lufthansa LHAG.DE and Ryanair RYA.I, have oil hedging in place, securing a part of their fuel supplies at fixed prices.

Finnair, which had hedged over 80% of its first-quarter fuel purchases, warned, however, that even the availability of fuel 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 it had not seen this happening yet.

Kuwait, a major jet fuel exporter to north-west Europe, has faced output cuts.

Airspace chaos in the Middle East

Highlighting the airspace chaos in the Middle East, planes arriving in Dubai were briefly placed in a holding pattern on Tuesday due to a potential missile attack, flight tracking service Flightradar24 said on X. The planes eventually landed.

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

Airfares have soared on Asia-Europe routes due to airspace closures and capacity constraints, and Hong Kong's Cathay Pacific Airways 0293.HK said on Tuesday 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 ($6) on domestic routes, NZ$20 on short-haul international services and NZ$90 on long-haul, with more adjustments to prices and schedules 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% from Thursday, with the sharpest increase on flights between Hong Kong and the Maldives, Bangladesh and Nepal.

Still, some European airlines said they saw no near-term need to act yet. A spokesperson for British Airways-owner IAG said it was well-hedged for the immediate future and had no plans to change ticket prices.

Airline shares stabilize after selloff

Some airline stocks rose and oil prices fell to around $90 a barrel on Tuesday from a high of $119 on Monday after U.S. President Donald Trump said on Monday the war could be over soon.

When markets opened in Europe, airline shares were up between 4% and 7%. Shares of major U.S. carriers Delta Air Lines DAL.N, United Airlines UAL.O, Southwest Airlines LUV.N and American Airlines AAL.O were down between 2% and 4% in early trading.

U.S. airlines rely less on hedging than their European and Asian rivals in managing their fuel costs, making their shares more vulnerable to oil's volatility.

In Asia, Qantas closed 0.5% higher, Korean Air Lines 003490.KS rose 3% and Cathay Pacific 0293.HK was up 3.6%. All had recorded sharp declines on Monday.

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

Conflicts shrinking available airspace

In addition to high fuel costs, tightening airspace also threatens to derail the global travel industry, as pilots reroute to avoid the Middle East conflict and capacity on popular routes fills up.

Emirates, Qatar Airways and Etihad typically jointly account for about one-third of the 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 the shortage of available airspace created by the war in Ukraine, with many avoiding Russian airspace and flying longer international routes. Now, with even less available airspace, they say their business has become even more challenging.

($1 = 7.8236 Hong Kong dollars)

($1 = 1.6892 New Zealand dollars)

Reporting by Shivangi Lahiri, Shivansh Tiwary Sameer Manekar in Bengaluru, Julie Zhu in Hong Kong, Heekyong Yang and Hyun Joo Jin in Seoul, Stine Jacobsen in Copenhagen, Essi Lehto in Helsinki, Panarat Thepgumpanat in Bangkok and Khanh Vu in Hanoi; Writing by Anne Marie Roantree and Joanna Plucinska; Editing by Jamie Freed and Tomasz Janowski