Airlines across the Asia-Pacific region have moved into an emergency defensive posture this week, implementing a wave of flight cancellations, steep fare hikes, and phased fuel surcharges.
The drastic measures come as the US-Israel-Iran conflict sends jet fuel prices toward a staggering US$200 per barrel, nearly tripling costs from earlier this year. Aviation fuel currently accounts for up to 40 per cent of an airline’s operating expenses.
Air New Zealand has taken the most aggressive action to date, announcing the cancellation of approximately 1,100 flights – roughly five per cent of its total schedule – through early May. The cuts primarily target off-peak domestic rotations to consolidate fuel use, affecting an estimated 44,000 passengers. The carrier has also implemented immediate fare increases, adding NZ$10 to domestic tickets and up to NZ$90 (US$52) for longhaul services. While the airline is heavily hedged against crude oil, it remains exposed to the cost of refining oil into jet fuel, which has spiked from US$22 to over US$115 per barrel in mere days.
Air India and Air India Express have introduced a three-phase surcharge expansion to combat rising costs and high domestic taxes. Starting March 12, a new Rs 399 (US$4.30) fee applies to all domestic routes, while surcharges to South-east Asia have risen to between US$40 and US$60. A second phase on March 18 will see longhaul surcharges jump to US$125 for Europe and US$200 for North America and Australia, with further adjustments for Hong Kong and Japan expected shortly.
Both Cathay Pacific and Qantas are raising international fares while shifting capacity toward Europe. As travellers avoid Middle Eastern transit hubs, Qantas reported that its European flights are reaching over 90 per cent capacity. Cathay Pacific has suspended flights to Dubai and Riyadh through March, but is adding frequencies to London and Zurich to meet redirected demand. Qantas has flagged a general fare increase of approximately five per cent, warning that some routes may become uneconomical if prices stay at US$200 per barrel.
Across the rest of the region, Malaysia Airlines, Firefly, and Batik Air is set to implement phased rollouts of surcharges. Malaysia Airlines has extended the temporary suspension of its Doha services until March 20, but all other services including Jeddah Madinah, London and Paris continue to operate as scheduled. Malaysia Airlines is also increasing widebody capacity between Asia and Europe to support onward journeys, with flights operating on alternative routes that avoid affected regions.
Vietnam Airlines and VietJet have seen operating costs jump 60 to 70 per cent, leading the former to petition the government for waivers off environment taxes on jet fuel to remain viable.
Over in South Korea, Korean Air has entered discussions regarding significant increases to fuel surcharges for April. Surcharges for longhaul routes like Incheon–New York could triple, potentially reaching 325,000 won (US$220) per ticket.
Singapore Airlines (SIA) and its budget subsidiary Scoot have extended the suspension of their Middle East services. SIA flights between Singapore and Dubai are now cancelled through March 28, while Scoot has suspended its Jeddah services until March 17 at the earliest.
SIA is regarded as having one of the more robust fuel hedging programmes, providing some protection against the refined jet fuel price surge. TTG Asia has reached out to SIA for comments on potential network-wide surcharges, but a response was not provided at press time.
