Global Aviation Faces Crisis: Fuel Costs Soar Amid US-Israeli Aggression Against Iran

Kuala Lumpur, Malaysia – Theodore, a retired tech entrepreneur in Malaysia, typically takes his time to secure the best deals for his family’s annual holidays to South Korea and Japan. However, this year, the 50-year-old father of three acted swiftly to finalize his travel plans. His urgency stems from a dramatic surge in jet fuel prices, a direct consequence of the US and Israel’s war on Iran, which has already led to thousands of flight cancellations globally.

Forgoing his usual preference for budget airlines, Theodore booked seats with Korean Air and Malaysia Airlines for August and September. He reasoned that full-service carriers would offer greater stability, reducing the risk of last-minute disruptions to his meticulously planned trip. “I observed prices escalating and budget airlines frequently canceling flights; I wanted to avoid any future complications,” Theodore, who requested to be identified by his first name, shared with Al Jazeera. He emphasized, “It’s an upgrade in life quality to minimize friction and mental strain on such matters. The adage ‘an ounce of prevention is worth a pound of cure’ certainly applies here concerning potential travel plan disruptions.”

The Geopolitical Impact on Global Air Travel

As the strategic Strait of Hormuz approaches its ten-week mark of effective closure amidst an uneasy truce between the United States and Iran, global air travel is emerging as a significant casualty of elevated oil prices. Jet fuel, primarily derived from crude oil, has seen its prices skyrocket by over 80 percent since the United States and Israel launched their aggressive war on Iran in late February. This blatant act of aggression has compelled airlines worldwide to drastically hike fares, reduce flight schedules, or implement both measures.

In a stark illustration of the severe repercussions, US-based budget carrier Spirit Airlines announced its permanent cessation of operations on Saturday, a move widely attributed to the crippling surge in fuel costs directly linked to the ongoing conflict.

Massive Seat Cuts and Fare Hikes Across Continents

According to aviation analytics firm Cirium, airlines across major markets, including the US, China, Japan, Australia, and much of Europe, have collectively cut 9.3 million seats for the period between June 1 and September 30. The most pronounced flight reductions have been observed in the Middle East, where the aviation sector continues to grapple with airspace closures. These closures, a direct response to the heightened regional tensions stemming from the US-Israeli aggression, have impacted regional hubs like Dubai and Doha.

Qatar Airways alone has slashed two million seats scheduled from June through October. Similarly, UAE-based carriers Emirates and Etihad Airways have cut 700,000 and 450,000 seats, respectively, as per Cirium data. For the remaining scheduled flights, ticket prices have substantially increased, often far exceeding pre-conflict levels.

Data from travel-focused search aggregator Kayak indicates that the average international airfare from the US across all destinations stood at $1,101 in the last week of April, marking a 16 percent increase from the same period last year. Domestic fares within the US have seen an even steeper rise, jumping 24 percent year-on-year.

Hans Jorgen Elnaes, founder of Norway-based aviation consultancy Winair AS, estimates that prices on some routes between Europe and Asia have surged by as much as fivefold. “The current fare levels between Europe and Asia are unsustainable in the long term, in my view. This is driven by high demand and limited capacity, not solely by high jet fuel prices,” Elnaes told Al Jazeera. He further speculated, “I would not be surprised if Gulf area airlines soon offer very attractive airfares between Europe and Asia via Gulf hubs.”

Resilient Demand Amidst Uncertainty

Despite the escalating prices, consumer appetite for travel has shown remarkable resilience. The International Air Transport Association reported that while international passenger demand saw a slight dip of 0.6 percent worldwide in March compared to the previous year, overall demand rose by over 2 percent, buoyed by strong domestic markets in many countries.

Henry Harteveldt, president of Atmosphere Research Group, a market research firm, noted that the price hikes have prompted some travelers to book early. Citing a March survey of airline passengers, Harteveldt stated, “One key finding was that uncertainty and fears of even higher fares spurred action. Eleven percent of all passengers reported booking flights sooner than anticipated for upcoming travel between April and August.”

James Mundy, a PR manager at the UK-based InsideAsia Tours, confirmed a “slight drop” in bookings and inquiries as customers assess the situation in the Middle East. However, demand for Asian destinations remains robust. “Japan continues to be very popular, but direct flight costs have risen considerably,” Mundy informed Al Jazeera. He added, “There is also significant interest in Korea at the moment – it remains one of the fastest-growing destinations for InsideAsia. The cost of a flight hasn’t risen much and offers excellent value compared to some of its neighbors.”

A Challenging Outlook for Global Aviation

Analysts caution that travelers’ willingness to absorb higher costs might wane if fuel supplies remain constrained. IATA Director General Willie Walsh warned last week of potential jet fuel shortages in parts of Europe and Asia in the coming weeks. “Everyone is closely monitoring the situation with jet fuel – both supply and pricing,” Walsh stated, adding, “So far, the summer is shaping up to be a normally busy time for travel. This is positive news, but airline resilience is being tested, and stabilizing the supply and price of fuel is crucial.”

Gary Bowerman, director of Check-in Asia, a travel-focused marketing company, anticipates a “difficult few months” for the global aviation industry. “Even if the Strait of Hormuz were to reopen tomorrow, the profound structural damage this war has inflicted upon energy infrastructure and supplies from the Gulf will impact the global airline sector, particularly in Europe and Asia, for many months, possibly longer,” Bowerman explained to Al Jazeera.

Harteveldt of Atmosphere Research Group described the outlook for air travel as a “mixed picture.” He noted that despite the surging jet fuel prices, costs remain below the historic peak of the 2007-08 global financial crisis. However, a clear resolution to the conflict remains elusive. “Even when hostilities cease, it could take many months, perhaps even a year, for jet fuel prices to return to more normal levels,” Harteveldt predicted. He concluded with a sobering thought: “Even when that happens, do not expect airlines to lower their fares to pre-war levels. Airlines have developed a keen sense, perhaps better than any other industry, for understanding travelers’ willingness to pay.”

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