Global airlines are beginning to pass rising fuel costs on to passengers as oil prices surge amid the ongoing US-Israeli war on Iran. New Zealand’s national carrier, Air New Zealand, said on Tuesday it has increased ticket prices across its network and warned that further fare adjustments could follow if fuel costs remain elevated.
According to the airline, the sharp increase in jet fuel prices — triggered by the escalating conflict in the Middle East — has significantly raised operating costs and created uncertainty for the global aviation industry.
Air New Zealand confirmed it has implemented fare increases on multiple routes as it seeks to offset the surge in jet fuel prices. the airline said one-way economy fares have risen by NZ $10 (USD 5.92) on domestic routes, NZ$20 on short-haul international flights, and NZ$90 on long-haul services, news agency Reuters reported.
Jet fuel prices, which were previously around $85 to $90 per barrel before the conflict, have climbed dramatically in recent days to between $150 and $200 per barrel, the airline said.
The report added that the carrier also announced that it is suspending its financial outlook for 2026, citing uncertainty stemming from the conflict and volatile fuel markets. “If the conflict leads to continued elevated jet fuel costs, we may need to take further pricing action and adjust our network and schedule as required,” the airline said in its statement to Reuters.
While airfares on major international routes—particularly between Asia and Europe—have already risen due to airspace closures and limited capacity, Air New Zealand is among the first airlines to publicly announce broad fare increases since the war began.
Iran war-linked oil price surge disrupts global aviation
The US-Israeli military campaign against Iran has sent global oil markets into turmoil, pushing crude prices sharply higher and raising fears of a significant slowdown in international travel.
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Rising fuel costs are a major concern for airlines because fuel is typically the second-largest expense after labour, accounting for 20% to 25% of operating costs.
Airspace disruptions linked to the conflict are also complicating flight operations, forcing airlines to reroute aircraft and increasing travel times and fuel consumption.
However, airline shares in Asia showed signs of recovery after US President Donald Trump said Monday the conflict could end soon. According to Reuters, oil prices fell to about $90 per barrel on Tuesday, down from a peak of $119 on Monday, easing some investor concerns.
Airline stocks rebounded as a result. Air New Zealand shares rose about 2%, Korean Air Lines jumped 8%, Australia’s Qantas Airways gained 1.5%, and Hong Kong-based Cathay Pacific climbed more than 4%, recovering part of the losses recorded earlier in the week.
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Airlines and governments seek ways to offset fuel costs
Some airlines are already exploring measures to soften the financial impact of rising fuel costs.
Cathay Pacific currently imposes fuel surcharges, including $72.90 each way on flights between Hong Kong and Europe or North America. The airline said it reviews these surcharges monthly, primarily based on jet fuel price movements rather than crude oil prices, and adjusts them when necessary.
In Southeast Asia, Vietnam Airlines has asked authorities to remove an environmental tax on jet fuel to help maintain operations. The Vietnamese government said airlines in the country have seen operating costs increase by 60% to 70% because of higher fuel prices, while suppliers are struggling to meet rising demand.
Air New Zealand said there are currently no disruptions to jet fuel supplies in New Zealand, but the airline is working closely with suppliers and government agencies to monitor the situation.
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Travel industry braces for prolonged disruption
The ongoing conflict is also beginning to affect travel demand and tourism across several regions.
Airlines are already navigating congested airspace as pilots reroute flights to avoid conflict zones, reducing capacity on major long-haul routes and pushing ticket prices higher.
According to aviation analytics firm Cirium, Middle Eastern carriers—including Emirates, Qatar Airways and Etihad—normally transport about one-third of passengers travelling from Europe to Asia and more than half of those flying from Europe to Australia, New Zealand and nearby Pacific islands. Any disruption to these networks could have wide-reaching effects on global travel.
Tour operators are also adjusting plans. South Korea’s HanaTour Service said it has cancelled group tours involving flights to the Middle East and waived cancellation fees for affected customers. All Middle East-related tours for March have been suspended.
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Tourism-dependent economies are also warning of financial losses. Thailand’s Ministry of Tourism has forecast that if the conflict continues for more than eight weeks, the country could lose 595,974 visitors and about 40.9 billion baht ($1.29 billion) in tourism revenue.
As the conflict continues to reshape global travel patterns and fuel markets, airlines are bracing for further volatility. Industry analysts warn that if oil prices remain high and airspace restrictions persist, passengers worldwide may face higher ticket prices and reduced flight options in the months ahead.
