Airlines are beginning to increase fares as the Middle East conflict drives up jet fuel prices. Air New Zealand announced fare hikes, citing the conflict's impact on oil prices, which have surged from around $85-$90 per barrel to $150-$200. The carrier has raised domestic economy fares by NZ$10, short-haul international by NZ$20, and long-haul by NZ$90. Vietnam Airlines has requested authorities remove an environment tax on jet fuel to manage a reported 60-70% increase in operating costs.
Despite these challenges, airline shares showed signs of stabilization. U.S. President Donald Trump's comments on a potential end to the conflict led to a market rebound, with oil prices retreating. Air New Zealand shares rose 2%, Korean Air Lines gained 6%, and Qantas Airways saw a more than 1% increase.
Fuel is a significant operating expense for airlines. The current high prices and airspace constraints are pushing ticket costs up on some routes, potentially leading to travel reconsiderations before the summer season. The broader travel industry faces severe implications, with rerouted flights and full capacity on popular routes. Travel agencies are reporting cancellations of Middle East-related tours, and Thailand forecasts significant losses in tourist numbers and revenue if the conflict persists.