Kamal Ghorui
Air travellers, brace yourselves for costlier tickets! You might soon be charged higher amounts for flight fares as the Middle East crisis continues to push fuel prices higher. The conflict has disrupted global oil supplies, and with the summer travel season just around the corner, industry experts say fare hikes are becoming inevitable. However, when the price hikes will kick in and how steep the increase will is still unclear.The pressure is expected to be most visible on long-haul international flights, which consume far more fuel than shorter domestic routes. While some airlines have already announced price adjustments, others are warning that rising fuel costs will soon make their way into ticket prices.United Airlines CEO Scott Kirby recently signalled that fare increases in the United States could arrive quickly as fuel costs continue to climb across the industry. “Probably start quick,” he said, referring to when higher airfares could begin appearing.
Conflict pushing fuel costs higher
The surge in jet fuel prices follows disruptions in global oil supply caused by the conflict in the Middle East. Oil exports have been constrained as shipments face continuous difficulties, prompting major producers including Kuwait, Saudi Arabia and Iraq to cut back production.The situation has been further complicated by attacks carried out by Iran on commercial ships in the Persian Gulf and on oil infrastructure in Gulf Arab countries following US and Israeli strikes. These developments have effectively stopped traffic through the Strait of Hormuz, a narrow maritime corridor through which about one-fifth of the world’s oil supply typically passes.The instability in crude oil markets has pushed up jet fuel prices sharply. According to the Argus US Jet Fuel Index, the average price airlines paid for jet fuel in the United States reached $3.99 per gallon on Friday. Two weeks earlier, the day before the war began, the average price stood at $2.50 per gallon. The index measures average jet fuel prices across major US airports.Government data also shows that airlines were paying significantly less for fuel earlier in the year. Figures from the US department of transportation’s bureau of transportation statistics indicate that US airlines paid roughly $2.36 per gallon in January, the latest month for which data is available.
Airlines face growing operating costs
Some carriers use fuel hedging strategies to protect themselves from sudden price increases, locking in prices months or even years in advance. However, this protection is often limited and does not cover all fuel needs. Many airlines also no longer rely heavily on hedging, which means extended periods of high fuel prices could push more carriers to raise fares.Kirby addressed the challenges of hedging during a Harvard event last week. “No one hedges anymore, and even if you do, hedging the crack spread is really hard to do,” he said. The crack spread refers to the difference between the price of crude oil and the cost of refined products such as petrol.Operational challenges are also adding to the burden. Airspace closures across parts of the Middle East have forced airlines to reroute flights, often requiring longer journeys that burn additional fuel and increase operating expenses.
Potential impact on passengers
Travellers could see the effects of rising fuel costs in several ways. Airlines outside the United States often impose fuel surcharges that are added to the base ticket price, and these charges can be increased when fuel becomes more expensive.Major US airlines typically do not use separate fuel surcharges. Instead, they include fuel expenses within the total fare, meaning passengers are more likely to see higher ticket prices rather than a separate fee, according to Tyler Hosford, security director at global risk management firm International SOS.Airlines may also look at other ways to offset costs by adjusting prices for optional services such as extra legroom seats, seat upgrades, checked baggage and priority boarding. As a result, the overall cost of a trip could rise even if base ticket prices remain unchanged initially.Christopher Anderson, a professor at Cornell University’s business school who studies operations and information management in the airline and hospitality industries, said prolonged high fuel prices could also prompt airlines to change schedules or reduce certain routes.
Fuel costs already driving fare increases
Airlines in the Asia-Pacific region have been among the first to respond with fare increases and fuel surcharges. If high jet fuel prices continue, analysts expect more airlines, particularly those without fuel hedging arrangements, to follow.Cathay Pacific, Hong Kong’s flag carrier, announced that it will raise its fuel surcharge beginning Wednesday.“The price of jet fuel has approximately doubled since March amid the latest developments in the Middle East,” the airline said in a statement Thursday.Several other airlines have also introduced price changes. Air France-KLM said that round-trip economy tickets on long-haul routes could increase by about 50 euros (around $57). Air India introduced fuel surcharges on certain routes on Thursday and said the charge will rise by up to $50 for tickets to Europe, North America and Australia after March 18. Hong Kong Airlines also raised fuel surcharges on several routes from Thursday, while South Africa’s FlySafair announced a temporary fuel surcharge.
Advice for travellers
Industry experts say travellers planning summer holidays may still be able to manage costs by booking flights earlier rather than waiting for last-minute offers.Locking in ticket prices sooner, especially when flexible booking options allow changes, can help secure fares before airlines adjust them further.Hosford recommends that travellers remain flexible with travel dates, compare prices from nearby airports and set alerts to monitor fare changes. He also suggested using frequent flyer miles or credit card points to book flights instead of waiting for the ideal deal.
