Jet fuel prices have surged to levels not seen in years, forcing airlines around the world to cut back on flights and raise ticket prices. The ongoing conflict in the Middle East is disrupting fuel supplies and air routes, hitting carriers like Air New Zealand and Qantas hard.

Flight Cuts Hit Australian and New Zealand Carriers

Air New Zealand has announced it will reduce about 5 per cent of its flight schedule, cancelling roughly 1,100 flights through early May. That’s around 44,000 passengers who will need to be rebooked. The cuts mainly affect domestic routes and regional airports, including popular areas like Marlborough and New Plymouth. But long-haul flights are less affected, with the airline focusing on routing passengers via US airspace to reach Europe, avoiding the more dangerous Middle Eastern skies.

Qantas is also feeling the pinch. The Australian carrier has joined several international airlines, including Scandinavian SAS and Thai Airways, in raising fares to offset the rising costs of jet fuel. The price hikes come after jet fuel prices shot up due to the conflict in Iran and Iraq, which has severely disrupted supply chains and airspace safety.

Fuel Prices on the Rise Amid Geopolitical Tensions

Oil prices have climbed sharply following attacks on fuel tankers in the Gulf, with Iran warning that prices could reach as high as $200 a barrel. That’s a big jump from recent prices and would have major knock-on effects for the cost of flying and goods transported by air.

Australia is particularly exposed because it no longer refines aviation fuel at scale. Sydney Airport’s chief executive Scott Charlton highlighted the country’s dependence on imported jet fuel, with stocks covering just 25 to 30 days. That means any disruption to shipping lanes or geopolitical instability in the Middle East could quickly lead to supply shortages and price spikes.

"We don't refine aviation fuel at scale anymore. We import it," Charlton said at a recent biofuels conference, pointing to a vulnerability many Australians may not be aware of.

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Airspace Restrictions and Safety Concerns Add to Challenges

Beyond fuel costs, airlines are grappling with the closure of Middle Eastern airspace due to missile and drone attacks.

The region has become a no-go zone for many carriers, forcing them to reroute flights and cancel services to and from the area. That’s pushed demand onto alternative routes, such as over the US, creating congestion and longer travel times.

Airspace restrictions have really hurt the aviation industry. Experts call this the worst crisis since COVID-19 shut down flights everywhere. Soaring fuel prices and restricted airspace are squeezing airline profits and forcing them to cut flights.

Financial Impact on Airlines and Investors

Air New Zealand’s shares fell by about 1 per cent following the announcements, mirroring declines in other major carriers like Cathay Pacific, Qantas, and Japan Airlines. Investors are clearly nervous about the rising fuel costs and the uncertain outlook for air travel in the region.

The rising costs come at a time when airlines are still recovering from the pandemic’s blow. Many have already been forced to increase fares once or twice to cover higher fuel prices, and this new surge is piling on more pressure.

In the long run, airlines will have to switch faster to fuel-efficient planes or alternative fuels. But for now, passengers can expect fewer flights and more expensive tickets, especially on routes that pass near or through the Middle East.

The ripple effect could also hit Australian tourism and business travel, as higher costs and fewer flight options make international trips less accessible.

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With the Middle East conflict continuing, airlines keep facing high fuel costs and limited airspace. Australian travellers and airlines will likely feel the impact well into the year, with no clear end in sight for these disruptions.

This article was created with AI assistance.