Airfare hike due to rise in oil prices amid US-Israel war over Iran
Global airlines are starting to pass the burden of rising fuel costs on to passengers amid rising oil prices. The America-Israel war is going on in Iran.
New Zealand’s national carrier, Air New Zealand, said on Tuesday it had raised ticket prices across its network and warned that further fare adjustments could be made if fuel prices remain high, news agency Reuters reported.
According to the airline, the escalating conflict in the Middle East has sharply raised jet fuel prices, significantly increasing operating costs and creating uncertainty for the global aviation industry.
Air New Zealand has confirmed it has implemented fare increases on several routes to compensate for the rise in jet fuel prices. According to the news agency, the airline said one-way economy fares had increased by NZ$10 (USD 5.92) on domestic routes, NZ$20 on short-haul international flights and NZ$90 on long-haul services. Reuters informed.
Jet fuel prices, which were around $85 to $90 a barrel before the conflict, have risen dramatically recently to between $150 and $200 a barrel, the airline said.
The carrier also announced it was suspending its financial outlook for 2026, citing uncertainty arising from the conflict and volatile fuel markets, the report said. “If jet fuel costs continue to rise due to the conflict, we may need to take further pricing actions and adjust our network and schedules as necessary,” the airline said in its statement to Reuters.
Air New Zealand said there are currently no disruptions to jet fuel supplies in New Zealand, but the airline is working closely with suppliers and government agencies to monitor the situation.
During this time, Hong Kong Airlines announced on its website that it will increase its fuel surcharge by 35.2% from Thursday, with the sharpest increases on flights between Hong Kong and the Maldives, Bangladesh and Nepal, where the charge will rise from HK$284 to HK$384 ($49).
Cathay Pacific also reviewed its fuel surcharges on a monthly basis, after keeping them stable last month – i.e., before the conflict began – at $72.90 each way on flights between Hong Kong and Europe, and North America.
In Southeast Asia, Vietnam Airlines officials have been asked to remove environmental taxes on jet fuel to help maintain operations. The Vietnamese government said the country has seen operating costs for airlines rise by 60% to 70% due to higher fuel prices, while suppliers are struggling to meet rising demand, which has led to increased financial pressure on airlines and contributed to a decline in their stock prices.
Airlines shares fall after oil price rise
Oil prices fell from a high of $119 on Monday to around $90 a barrel on Tuesday, allaying some investors’ concerns, according to Reuters. However, airline stocks in Asia showed signs of recovery after US President Donald Trump said on Monday that the conflict could end soon.
Airline stocks rose as a result. Shares of Air New Zealand rose nearly 2%, Korean Air Lines rose 8%, Australia’s Qantas Airways rose 1.5%, and Hong Kong-based Cathay Pacific rose more than 4%, recovering part of losses recorded earlier in the week.
Iran war-related oil price surge could slow international travel
The US-Israeli military campaign against Iran has roiled global oil markets, sending crude prices soaring and raising fears of a significant slowdown in international travel.
Rising fuel costs are a major concern for airlines, as fuel is typically the second largest expense after labour, accounting for 20%–25% of operating costs.
Conflict-related airspace disruptions are also complicating flight operations, forcing airlines to reroute aircraft and increasing travel time and fuel consumption.
The travel industry is bracing for prolonged disruption
The ongoing conflict is also beginning to impact travel demand and tourism in many areas.
Airlines are already navigating congested airspace as pilots reroute flights to avoid conflict areas, reducing capacity on key long-haul routes and sending ticket prices rising.
According to aviation analytics firm Cirium, Middle Eastern carriers—including Emirates, Qatar Airways, and Etihad—normally transport about a third of the passengers travelling from Europe to Asia and more than half the passengers flying from Europe to Australia, New Zealand, and the nearby Pacific islands. Any disruption to these networks could have a cascading effect on global travel.
Tour operators are also adjusting plans. South Korea’s Hanatour service said it had cancelled group tours involving flights to the Middle East and waived cancellation fees for affected customers. All Middle East-related tours have been suspended for March.
Economies dependent on tourism are also warning of financial losses. Thailand’s Tourism Ministry has estimated that if the conflict continues for more than eight weeks, the country could lose 595,974 visitors and approximately 40.9 billion baht ($1.29 billion) in tourism revenue.
As global travel patterns and fuel markets continue to struggle to reshape, airlines are bracing for further volatility. Industry analysts have warned that if oil prices remain high and airspace restrictions continue, travellers around the world could face higher ticket prices and fewer flight options in the coming months.
