Asia Airlines Raise Ticket Prices, Consider Flight Suspensions Amid Fuel Shortage Concerns

Asian Airlines Brace for Oil Price Surge Amid Middle East Turmoil

As tensions in the Middle East intensify, airlines across Asia are responding by increasing fares and preparing for the possibility of grounding aircraft, with fears mounting that the region could experience its most severe oil crisis since the 1970s.

According to industry insiders, Indian airlines have already raised prices on long-distance routes by around 15% and are evaluating further hikes. In Vietnam, state-run media has cautioned that ticket prices could soar by up to 70% due to the nation's heavy dependence on imported aviation fuel.

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Hong Kong Airlines announced that, starting March 12, it will increase fuel surcharges on various routes, including a HK$5 rise for flights to mainland China and a HK$150 hike for long-haul journeys such as those to North America.

Asian carriers are generally less protected against oil price volatility compared to their counterparts in Europe and the United States, leaving them more exposed to sudden spikes in jet fuel costs. This vulnerability has led some low-cost airlines in Southeast Asia to consider grounding aircraft if fuel becomes prohibitively expensive or unavailable.

Oil prices surged toward $120 per barrel earlier this week before dropping after President Donald Trump suggested the conflict could soon be resolved. Trump also indicated plans to lift oil sanctions and have the US Navy escort tankers through the crucial Strait of Hormuz, which handles about 20% of the world’s crude shipments.

“There’s widespread alarm,” said June Goh, a senior analyst at Sparta Commodities SA. “Asian airlines with limited hedging are particularly exposed, especially if they sold tickets before the recent spike in jet fuel prices.”

Industry experts warn that if the current situation persists for more than three months, some budget airlines with thin profit margins could face bankruptcy. Michael Linenberg of Deutsche Bank AG noted that airlines globally might have to ground thousands of planes, with the weakest operators potentially ceasing operations altogether.

Air New Zealand Ltd. suspended its earnings forecast on Tuesday, citing extreme volatility in jet fuel prices that rendered its previous assumptions obsolete. The airline expects the crisis to significantly impact its earnings for the second half of the year and will not provide updated guidance until market conditions stabilize.

Wider Impact on Global Aviation

The growing strain on the aviation sector highlights the far-reaching consequences of the ongoing conflict, which continues more than a week after the initial US and Israeli strikes on Iran. Major airlines and airports in the Middle East have nearly halted operations, and the resulting uncertainty over fuel supplies is casting a long shadow over international air travel.

Despite these challenges, some in the industry remain hopeful that the crisis will be short-lived. “Personally, I believe this situation won’t last long,” said John Plueger, CEO of Air Lease Corp. “The world doesn’t come to a standstill—it may just pause temporarily.”

Carsten Spohr, CEO of Deutsche Lufthansa AG, recently stated that his airline group is better positioned than many competitors due to its hedging strategy. He added that Lufthansa is increasing capacity on Asian and African routes, as Middle Eastern rivals are still struggling to resume normal operations.

Nevertheless, shares of Asian airlines are expected to remain volatile as uncertainty continues. The BI Asia Pacific Airlines index rebounded after an eight-day decline, with Asiana Airlines recovering from a 20-year low and AirAsia X Bhd—previously the world’s worst-performing airline stock—jumping over 14% in a single day.

Reporting contributed by Nguyen Xuan Quynh, Nguyen Kieu Giang, Nguyen Dieu Tu Uyen, Julie Johnsson, Francesca Stevens, and Tracy Withers.

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