JEDDAH: Military operations involving the US and Israel against Iran have roiled global energy markets, sending jet fuel prices sharply higher and prompting a wave of fare increases and fuel surcharges from airlines worldwide.
Jet fuel, which traded at roughly $85 to $90 per barrel before recent strikes, has surged to $150 to $200 per barrel in recent days, underscoring the scale of the cost shock.
Several major carriers, including Australia’s Qantas Airways, Scandinavia’s Scandinavian Airlines and Air New Zealand, announced airfare hikes on March 10, attributing the moves to a steep rise in fuel costs linked to the Middle East conflict, according to Reuters. These were joined by Air India and Air Chathams.
Speaking to Arab News, Khaled Ramadan, economist and head of the International Center for Strategic Studies in Cairo, said the developments have prompted some airlines to hike fares and suspend financial outlooks, as fuel constitutes 20 to 30 percent of operating costs.
“Over the coming months, airline fares could rise 15 to 20 percent on international routes, exacerbated by airspace closures forcing detours that add hours to flights and burn extra fuel,” he said, adding that low-cost carriers in Asia and unhedged US airlines face the sharpest margin pressure.
The conflict has not only disrupted shipping along key oil export routes — including the critical Strait of Hormuz — but also upended flight operations and pricing on some of the busiest global air links.
That has contributed to higher ticket prices on certain long-haul routes and sparked concerns across the travel sector about a broader slump in demand that could leave planes parked if pressures persist.
Regional carriers respond
The trend is spreading beyond Europe and the Asia-Pacific region, with Air India Group announcing a phased expansion of fuel surcharges across its domestic and international network. The airline said the move was necessitated by a sharp escalation in aviation turbine fuel, or ATF, prices linked to supply disruptions associated with the geopolitical situation in the Gulf region.
“Since early March 2026, ATF, which accounts for nearly 40 percent of an airline’s operating costs, has seen significant price escalation due to supply interruptions,” the airline said in a statement.
In India, the pressure is amplified by high excise duty and value added tax on ATF in major metro cities such as Delhi and Mumbai, magnifying the impact and placing additional strain on airline economics.
The levy will take effect in phases from March 12, with initial charges of 399 Indian rupees ($4.4) per domestic and SAARC flight and incremental surcharges of up to $200 on long-haul routes in later stages.
In its announcement, Air India acknowledged the hardship for travelers but described the measure as necessary due to factors beyond its control.
“Absent such fuel surcharges, it is likely that some flights would be unable to cover operating cost and would have to be canceled,” the airline said, highlighting the risk to route viability if jet fuel costs remain elevated.
Wider industry responses
Beyond fare and surcharge adjustments, carriers are adapting operationally to the challenging environment.
Airspace closures and security concerns in the Middle East have forced some airlines to reroute flights, contributing to higher fuel burn and operational costs.
At the same time, airline shares have shown signs of stabilizing after sharp market sell-offs, as oil prices eased slightly following indications that tensions could de-escalate.
While some airlines, such as Germany’s largest airline Lufthansa and Ireland-based low-cost airline Ryanair, benefit from fuel hedging that limits exposure to price swings, others without extensive hedges are increasingly passing costs on to travelers or warning of future adjustments if jet fuel remains elevated.
The ripple effects of rising jet fuel costs are also being felt in New Zealand, where Air Chathams has introduced a $20 fuel surcharge on all new bookings.
The airline cited shipping concerns through the Strait of Hormuz and the Middle East conflict as key drivers behind the sharp jump in fuel prices, which have risen by more than 120 percent in recent weeks.
This surcharge will be reviewed regularly and removed once fuel prices return to more normal levels, the airline said.
Ramadan said that the global travel industry risks a slowdown, with aircraft potentially grounded if demand dips due to higher costs and safety concerns.
He added that tourism-dependent economies like Thailand, with 12 percent of gross domestic product derived from tourism, and Africa could see growth stall, with bookings down 25 to 60 percent from Europe and the Middle East.
“If the conflict persists beyond weeks, as projected by some analysts, it may usher in a ‘new era’ of elevated fares and rerouted global aviation, shifting hubs away from the Gulf and costing billions in lost revenue,” Ramadan warned.
He added that resilient demand for post-pandemic travel offers hope for recovery if tensions ease, and airlines must hedge fuel risks while governments could subsidize routes to mitigate broader economic fallout.
