Airlines Worldwide Grapple with Soaring Jet Fuel Costs

Global airlines are raising fares, adding fuel surcharges, and canceling flights amid a sharp surge in jet fuel prices triggered by the U.S.-Israeli war on Iran that began February 28, 2026. This marks the industry’s toughest challenge since COVID-19, with fuel costs roughly doubling and straining carriers everywhere.

Fuel Price Surge Explained
Jet fuel jumped from $85–$90 per barrel pre-conflict to $150–$200 or higher, per IATA data, as the Strait of Hormuz closure disrupted one-fifth of global oil flows and spiked refining costs. Spot prices hit peaks like $216 per barrel equivalent on March 19 and $1,133 per metric ton in Europe.

Carriers Respond with Hikes and Cuts
Major airlines acted fast: Air France-KLM added €50 to long-haul economy fares; Cathay Pacific hiked surcharges 34% from April 1; Thai Airways raised prices 10–15%; SAS canceled 1,000+ April flights after March reductions. U.S. giants Delta and American each faced $400 million in March costs alone, while Air New Zealand suspended forecasts and increased fares by NZ$10–90. Cebu Pacific suspended flights like Davao-Bangkok and Iloilo-Singapore through October, while reducing frequencies to Sydney and others; Philippine Airlines paused select Cebu and Clark services. Over 60% of global carriers now plan similar moves.

Hedging’s Shortfalls Exposed
U.S. airlines largely dropped hedging, leaving them vulnerable, while Europeans like Air France-KLM covered 70% of near-term needs, but hedges track crude oil, not jet fuel, which rose faster. IATA’s Willie Walsh deemed fare hikes “inevitable” as fuel hits 26%+ of costs, with Deutsche Bank calling it an “existential threat” to weaker players.

Outlook Remains Uncertain
Demand holds steady so far, with strong U.S. bookings, but a prolonged crisis could erode it. Ryanair’s hedging buys time, yet a six-to-nine-month Hormuz shutdown risks broader woes. Capacity cuts spread from passenger to freight routes, tightening global networks.