Global airlines raise fares and suspend outlooks as Middle East conflict sends jet fuel prices soaring, impacting travel demand and airline shares.
WELLINGTON: Air New Zealand has raised all its fares and suspended its financial outlook due to the surge in jet fuel prices caused by the Middle East conflict. The airline warned further pricing and network adjustments may be necessary if high fuel costs persist.
Jet fuel prices have skyrocketed from USD 85-90 per barrel before the conflict to between USD 150 and USD 200. The carrier increased one-way economy fares by NZD 10 on domestic routes, NZD 20 on short-haul international flights and NZD 90 on long-haul services.
While airfares on Asia-Europe routes had already spiked due to airspace closures, Air New Zealand is among the first to announce broad fare increases since the war began. The conflict has upended global travel, sparking fears of a deep slump and potential widespread grounding of planes.
In Vietnam, national carrier Vietnam Airlines has asked authorities to remove an environmental tax on jet fuel to help maintain operations. The government said local airlines’ operating costs have risen 60% to 70% due to the fuel price surge and supply difficulties.
Air New Zealand said there is currently no disruption to jet fuel supplies in New Zealand. The airline is working closely with suppliers and the government to monitor developments.
Airline shares showed signs of stabilising in Asian trade after a recent selloff. This followed a comment from US President Donald Trump that the war could end soon, which sent oil prices down to around USD 90 a barrel.
Air New Zealand shares rose 2%, while Korean Air Lines gained 8%. Qantas Airways was up 1.5% and Cathay Pacific advanced more than 4%. All had recorded sharp drops on Monday.
Cathay Pacific already has fuel surcharges in place, such as USD 72.90 each way on flights between Hong Kong and Europe and North America. The airline said it reviews surcharges monthly based on jet fuel price movements.
Fuel is the second-largest expense for airlines after labour, typically accounting for 20% to 25% of operating costs. High oil prices and airspace closures are pushing ticket prices on some routes sky-high, forcing travellers to reconsider plans.
The conflict is taking a severe toll on the travel industry. Airlines are navigating tight airspace as pilots reroute to avoid the Middle East, with capacity on popular routes filling up.
Emirates, Qatar Airways and Etihad normally fly about one-third of passengers from Europe to Asia. They also carry more than half of all passengers from Europe to Australia, New Zealand and nearby Pacific Islands.
In South Korea, HanaTour Service has been cancelling group tours to the Middle East and waiving fees for affected customers. All Middle East-related tours for March will be suspended.
Thailand’s Ministry of Tourism forecast that if the conflict drags on for more than eight weeks, the country will lose nearly 600,000 tourists. The estimated tourism revenue loss would be THB 40.9 billion.
 The Sun Malaysia
