Korean Air Also Announces Emergency Fuel Surcharge Adjustment... Middle Eastern and Asian Airlines Hit Hard

Jet Fuel Prices Double as Strait of Hormuz Remains Closed

Airlines Cut Routes and Raise Fares to Conserve Fuel

US and European Carriers Face Less Impact, but Prolonged Crisis Could Strain Resilience

As the war in Iran has shaken the global aviation industry, the New York Times (NYT) reported on the 24th (local time) that Middle Eastern and Asian airlines are being hit harder than their U.S. counterparts.

With the Strait of Hormuz, through which 20% of the world’s crude oil supply passes, under blockade, jet fuel prices have roughly doubled. In response, airlines are raising ticket prices and fuel surcharges. Air France and KLM increased the prices of long-haul tickets by 50 euros (about 86,784 won). India's Air India, IndiGo, and Akasa Air, as well as Hong Kong's Cathay Pacific, have also announced fuel surcharge hikes. On the 17th, Korean Air Cargo announced it would implement an emergency adjustment to its fuel surcharge policy starting from the first of next month.

On the 7th (local time), an Emirates Airlines plane is taking off from Dubai International Airport. Photo by Reuters Yonhap News

In the Middle East, which is directly adjacent to the conflict zone, governments have closed airports or restricted flights for safety reasons, resulting in tens of thousands of flight cancellations.

According to aviation data provider OAG, the Middle East's largest airline, Emirates Airlines, reduced its number of flights this week by 40% compared to the last week of February. Qatar Airways saw a 62% decrease, and Etihad Airways a 50% reduction. All 44 airlines that had planned operations in the Middle East during the last week of February have canceled all flights through next month. Notably, Air India canceled 16 out of its 36 long-haul flights connecting the Middle East and India just the previous day.

Some major airlines in Asia and the South Pacific have managed to absorb the demand from Middle Eastern carriers and are actually seeing improved performance. However, they are struggling with soaring fuel costs, declining demand, and increased flight times. Fuel consumption has risen as planes are rerouted to avoid airspace over the war zone. The NYT reported that in some regions, jet fuel shortages have led airports to implement fuel rationing systems.

Air New Zealand announced plans to cut back on low-demand routes over the next two months to save fuel. China Southern Airlines has suspended its three weekly direct flights between Guangzhou and Darwin, Australia, replacing them with connecting flights via Sydney. Air Busan reduced flights to Da Nang, Cebu, and Guam in April, while Philippine low-cost carrier Cebu Pacific will suspend five routes and reduce the frequency on 10 routes starting mid-next month.

In contrast, airlines in the United States and Europe have faced relatively less impact. The NYT noted that many Americans still have the means to afford high airfare. Demand in Europe also remains strong, with most airlines having secured inexpensive jet fuel through hedging strategies such as futures contracts. However, if the war drags on for several months, fare hikes will become inevitable for them as well.

Scott Kirby, CEO of United Airlines in the U.S., said that ticket prices could rise by up to 20% to reflect the increase in jet fuel prices, adding that oil prices could reach as high as $175 per barrel. He stated, "For now, demand is at the strongest level in history," noting that "the top 10 weeks in terms of booking revenue have all occurred within the last 10 weeks."

Michael O’Leary, CEO of Irish low-cost airline Ryanair, said, "We are well hedged against risk, so we do not expect significant cost increases." However, he warned, "If the war lasts six to nine months and the Strait of Hormuz remains blocked, there will be problems."

Carsten Spohr, CEO of Germany’s Lufthansa Group, noted that the average profit per passenger is only about 10 euros, and once current fuel hedging contracts expire, it will be difficult to withstand persistently high fuel costs.

This content was produced with the assistance of AI translation services.