SYDNEY: Global airlines have begun increasing ticket prices as jet fuel costs surge following the escalating conflict in the Middle East, with carriers warning that further fare hikes may follow if oil prices remain high.
Air New Zealand confirmed it has raised fares across its network, becoming one of the first airlines to introduce broad price increases since the war between the United States, Israel and Iran began.
Fuel Prices Driving Fare Hikes
Airlines say jet fuel prices, previously around $85–$90 per barrel, have surged to between $150 and $200 per barrel in recent days.
Due to rising costs, Air New Zealand announced the following increases:
NZ$10 increase on domestic flights
NZ$20 increase on short-haul international routes
NZ$90 increase on long-haul flights
The airline also said it has suspended its financial outlook for 2026 because of uncertainty surrounding the ongoing conflict.
Airlines Warn of Further Increases
The carrier warned that if the conflict continues and fuel prices remain elevated, additional pricing adjustments and schedule changes may become necessary.
Other airlines are also feeling the pressure. Vietnam Airlines has requested the government remove environmental taxes on jet fuel as operating costs have reportedly risen by 60% to 70%.
Airline Shares Stabilise
Airline stocks, which initially fell sharply due to the crisis, showed signs of stabilising after Donald Trump suggested the conflict could end soon.
Following the comments:
Air New Zealand shares rose 2%
Korean Air gained 8%
Qantas increased 1.5%
Cathay Pacific climbed more than 4%
Travel Industry Faces Pressure
Fuel typically represents 20% to 25% of airline operating costs, making it the second-largest expense after labour.
Higher oil prices and airspace closures in the Middle East are already forcing airlines to reroute flights, increasing travel times and ticket prices on some routes.
Tourism industries are also feeling the impact. Thailand’s tourism ministry warned that if the conflict lasts more than eight weeks, the country could lose nearly 600,000 tourists and $1.29 billion in tourism revenue.
Experts say prolonged instability in the region could significantly affect global travel demand and airline profitability.