Australia's Qantas Airways, Scandinavia's SAS and Air New Zealand announced airfare increases on Tuesday, blaming the steep rise in fuel costs caused by the Middle East conflict.
Jet fuel prices, which hovered between $85 and $90 a barrel before the US and Israeli attacks on Iran, have soared to between $150 and $200 a barrel in recent days, New Zealand's flag carrier said as it suspended its 2026 financial outlook due to uncertainty over the conflict.
The war, which disrupted shipping along the world's most important oil export route, has sent oil prices soaring, upending global travel, sending airfares on some routes through the roof and raising fears of a deep slump in travel that could lead to widespread grounding of planes.
“Increases of this magnitude make it necessary to react to maintain stable and reliable operations,” a SAS spokesperson said in a statement to Reutersadding that it had implemented a “temporary price adjustment.”
Scandinavia's largest airline said last year it had temporarily adjusted its fuel hedging policy due to uncertain market conditions and did not have fuel consumption hedged for the next 12 months.
While several Asian and European airlines, including Lufthansa and Ryanair, have oil coverage, securing a portion of their fuel supplies at fixed prices, Finnair warned that even fuel availability could be at risk if the conflict drags on. Kuwait, a major exporter of jet fuel to northwest Europe, has faced production cuts.
“A prolonged crisis could affect not only the price of fuel but also its availability, at least temporarily,” a Finnair spokesperson said, adding that he had not seen this happen yet. It had covered more than 80% of its first-quarter fuel purchases.
Chaos in airspace 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 possible missile attack, flight tracking service Flightradar24 said in X. The planes eventually landed.
Qantas said that in addition to raising international fares, it was exploring options to redeploy capacity to Europe as airlines and passengers seek to evade disruptions in the Middle East, where drone and missile attacks have restricted flights.
Airfares have soared on Asia-Europe routes due to airspace closures and capacity constraints, and Hong Kong's Cathay Pacific Airways said on Tuesday it would add additional flights to London and Zurich in March.
Air New Zealand said it had increased one-way economy fares by NZ$10 ($6) on domestic routes, NZ$20 on short-haul international services and NZ$90 on long-haul routes, and further adjustments to prices and schedules may be made if jet fuel costs remain high.
Hong Kong Airlines said on its website it would increase its fuel surcharges by up to 35.2% from Thursday, with the biggest increase on flights between Hong Kong and the Maldives, Bangladesh and Nepal.
Airline shares stabilize after liquidation
Shares of some airlines rose and oil prices fell to around $90 a barrel on Tuesday from a high of $119 on Monday after US President Donald Trump said on Monday that the war could end soon.
When markets opened in Europe, airline stocks rose 4% to 7%. In Asia, airline stocks showed signs of stabilization, with Qantas closing up 0.5%, Korean Air Lines up 3% and Cathay Pacific up 3.6%. All had recorded sharp falls on Monday.
Fuel is the second largest expense for airlines after labor and typically accounts for between a fifth and a quarter of operating expenses.
Conflicts reduce available airspace
In addition to high fuel costs, restricted airspace also threatens to derail the global travel industry, as pilots are diverted to avoid the Middle East conflict and capacity on popular routes fills up.
Emirates, Qatar Airways and Etihad together typically account for about a third of 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 a shortage of available airspace created by the war in Ukraine, with many avoiding Russian airspace and flying longer international routes. Now, with even less airspace available, they say their business has become even more challenging.
