An Emirates Airbus A380 passenger plane stands at Vaclav Havel Airport in Prague, Czech Republic, 02 March 2026. Following a joint Israel-US military operation targeting multiple locations across Iran in the early hours of 28 February 2026 and Iran's retaliatory attacks across the region, several countries closed their airspace and airlines cancelled flights because of safety concerns and disrupted key air routes amid the escalating conflict. (Photo: EPA / MARTIN DIVISEK) By Shivangi Lahiri and Sameer Manekar
Australia's Qantas Airways QAN.AX, Scandinavia's SAS and Air New Zealand AIR.NZ were among carriers that announced price increases, while others warned the crisis could threaten fuel supplies or force further schedule changes.
Jet fuel prices, which were around $85 to $90 per barrel before U.S.-Israeli strikes on Iran, have soared to between $150 and $200, Air New Zealand said as it suspended its 2026 financial outlook because of uncertainty over the conflict.
The war has disrupted a key oil-export corridor, driving up airline costs, pushing fares higher on some routes and deepening concern about a broader hit to travel demand.
"Increases of this magnitude make it necessary to react in order to maintain stable and reliable operations," an SAS spokesperson said, adding it had implemented a "temporary price adjustment."
SAS last year temporarily adjusted its fuel hedging policy because of uncertain market conditions and said it had no fuel consumption hedged for the following 12 months.
Several Asian and European airlines, including Lufthansa LHAG.DE and Ryanair RYA.I, have hedging in place, securing part of their fuel needs at fixed prices.
Finnair, which had hedged more than 80% of its first-quarter fuel purchases, warned fuel availability could also come under pressure if the conflict dragged on.
"A prolonged crisis could affect not only the price of fuel but also its availability, at least temporarily," a Finnair spokesperson said.
Kuwait, a major jet fuel exporter to north-west Europe, has faced output cuts.
AIRSPACE CHAOS IN THE MIDDLE EAST
Planes arriving in Dubai were briefly placed in a holding pattern on Tuesday because of a potential missile attack, flight tracking service Flightradar24 said on X, underscoring the region's airspace disruption. The planes eventually landed.
Airlines are already adjusting networks and prices in response. Qantas said it was exploring redeploying capacity to Europe, while Cathay Pacific 0293.HK said it would add flights to London and Zurich in March as airspace closures and capacity constraints drive up fares on Asia-Europe routes.
Air New Zealand said it had raised fares across routes and warned further price or schedule changes could follow if jet-fuel costs remained elevated.
Hong Kong Airlines said it would raise fuel surcharges by up to 35.2% from Thursday. Air India said it would begin a phased increase in fuel surcharges on domestic and international routes.
Some European carriers said they saw no immediate need to raise prices. IAG ICAG.L, the owner of British Airways, said it was well hedged for the near term and had no plans to adjust fares. British Airways, however, said it had brought forward the end of its winter-season flights to Abu Dhabi because of the "continuing uncertainty."
AIRLINE SHARES STABILISE AFTER SELLOFF
Some airline stocks rose as oil prices fell to around $90 a barrel on Tuesday from a high of $119 on Monday after U.S. President Donald Trump said on Monday the war could be over soon.
In Europe, shares of major airlines closed higher, rising between 3% and 8%. Shares of major U.S. carriers Delta Air Lines DAL.N, United Airlines UAL.O, Alaska Air ALK.Nand American Airlines AAL.O were down between 1.5% and 2.5% in afternoon trade.
Most major U.S. airlines no longer hedge their fuel costs, unlike European and Asian carriers that continue to maintain active hedging programs. Fuel is typically their second-largest expense after labor.
Without the protection of fuel hedges, airlines have little choice but to lean on higher fares to offset rising costs. Deutsche Bank's latest data shows U.S. airfares climbing quickly, with both last-minute tickets and advance-purchase fares surging over the past week.
With passenger traffic continuing to outpace the growth in airline seat capacity, and some carriers forecasting record spring break demand, analysts say the backdrop should help the market absorb higher fares.
Rising fuel costs are also expected to push airlines to slow their growth plans, effectively boosting their pricing power. Still, it remains unclear whether these steps will be enough to fully protect profit margins.
Major U.S. carriers are widely expected to update their outlooks ahead of an industry conference next week, but some analysts have already trimmed their profit and capacity forecasts for the current quarter and the full year. Analysts at Melius, for example, have cut their net‑income estimates by 10%.
CONFLICTS SHRINKING AVAILABLE AIRSPACE
In addition to high fuel costs, tightening airspace threatens to further disrupt the global travel industry as pilotsreroute around the Middle East conflict and capacity on key routes fills up.
Emirates, Qatar Airways and Etihad together account for about one-third of passenger traffic between Europe and Asia and carry more than half of all passengers flying from Europe to Australia, New Zealand and Pacific islands, according to Cirium.
European airlines have already been dealing with reduced airspace because of the war in Ukraine, with many avoiding Russian airspace and flying longer routes. With even less airspace now available, they say operating conditions have become more challenging.
(Reporting by Shivangi Lahiri, Shivansh Tiwary Sameer Manekar in Bengaluru, Rajesh Kumar Singh in Chicago, Julie Zhu in Hong Kong, Heekyong Yang and Hyun Joo Jin in Seoul, Stine Jacobsen in Copenhagen, Essi Lehto in Helsinki, Panarat Thepgumpanat in Bangkok, Sam Tabahriti and Khanh Vu in Hanoi; Writing by Anne Marie Roantree, Joanna Plucinska and Rajesh Kumar Singh; Editing by Jamie Freed, Tomasz Janowski and Nick Zieminski)