Airlines cut flights and raise fare prices

Airlines around the world have taken emergency measures in response to fuel disruption caused by the US-Israeli war with Iran.

Airlines such as Air New Zealand, Air India, China Eastern Airlines, SAS, United Airlines, Air France-KLM, and Cathay Pacific have all outlined plans to either raise ticket prices, cancel flights, or change fuel surcharges.

EasyJet and IAG – which owns both British Airways and Iberia – have reportedly been insulated from fuel shocks, having arranged to buy their fuel at a fixed price prior to the start of the war.

According to report by the BBC, benchmark European jet fuel prices hit an all-time high of US$1,838 per tonne last week, compared with $831 prior to the war.

The Persian Gulf typically accounts for approximately 50% of Europe’s oil imports, with the majority of it being transported through the Strait of Hormuz – which has been effectively closed after the war began on 28 February. Under the terms of the two-week ceasefire announced on 7 April, it could be reopened in a controlled way by Friday 10 April.

While the ceasefire may offer some respite for airlines – the price of crude oil has fallen substantially in the past day – damage to oil production and refining infrastructure across the Middle East means that a rapid return to pre-war fuel prices is unlikely.

This issue will likely be accentuated as demand increases over the summer travel season.