Middle East Tensions Drive Up Oil Prices, Triggering a Global Wave of Airfare Hikes

Impacted by the escalating tensions in the Middle East, international jet fuel prices have continued to surge, sharply increasing cost pressures across the global aviation industry. Since the disruption of shipping in the Strait of Hormuz—a critical chokepoint handling approximately 20% of the world’s seaborne crude oil trade—its closure has resulted in a daily market supply gap of 7 million to 11 million barrels. Jet fuel prices have skyrocketed from $85–$90 per barrel prior to the conflict to $150–$200, directly inflating the largest cost component for airlines.

Fuel is the single largest expense for carriers, accounting for roughly one-third of total operational costs. In 2025, China’s civil aviation sector consumed over 40 million tons of jet fuel, with expenditures exceeding 200 billion RMB. A 50% increase in oil prices would translate to 100 billion RMB in additional costs. To provide context, in 2024, the fuel costs for Air China, China Eastern Airlines, and China Southern Airlines reached 53.7 billion, 45.5 billion, and 55.0 billion RMB, respectively. Given that the entire industry’s profit in 2025 was a mere 6.5 billion RMB, even minor fluctuations in oil prices threaten to completely wipe out these margins.

Asia and Oceania Airlines Spearhead Price Adjustments

Faced with surging costs, airlines in the Asia-Pacific and Oceania regions have been the first to act. Hong Kong Airlines increased its fuel surcharges effective March 12, with short-haul routes to destinations like Japan, South Korea, and Thailand seeing a 31% hike, while long-haul flights to Europe and North America added up to 150 HKD per one-way trip.

Globally, the trend is accelerating: Air India has raised long-haul fares by 15%, and Thai Airways is planning a 10%–15% price increase. Vietnam Airlines, which is highly reliant on imported jet fuel, warned that ticket prices could jump by as much as 70%. In Oceania, Qantas has raised its international fares by an average of about 5%. Meanwhile, Air New Zealand has suspended its earnings guidance and imposed additional fees ranging from 10 to 90 NZD across its domestic and international routes. Furthermore, British Airways has proactively canceled flights to and from Abu Dhabi and selected Middle Eastern regions through the end of the year to mitigate both safety risks and mounting cost pressures.

Chinese Domestic Airlines Hold Fares Steady, But April 5 Looms as a Critical Window

Currently, major domestic carriers such as Air China, China Eastern, and China Southern are still operating under the fuel surcharge standards set on January 5: 10 RMB for flights under 800 kilometers, and 20 RMB for flights over 800 kilometers. This temporary stability is attributed to China’s monthly adjustment mechanism for domestic jet fuel prices, where fuel surcharges are calculated based on the comprehensive procurement costs of the previous month, with a starting threshold of 5,000 RMB per ton.

The next price adjustment window is scheduled for April 5. If oil prices remain at their current highs, fuel surcharges for domestic routes are highly likely to see an upward adjustment. Industry insiders point out that even with a surcharge increase, it typically only covers 50%–60% of the incremental fuel costs, leaving airlines to absorb the remainder internally. With the Middle East crisis unlikely to be resolved in the short term, the global aviation industry is facing a severe test of its cost management and pricing strategies.