Air New Zealand announced on Tuesday that it has increased ticket prices due to the conflict in the Middle East, noting that further pricing measures may be taken. This move underscores the efforts of global airlines to pass the costs of rising oil prices onto passengers.
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The New Zealand carrier stated that jet fuel prices, which ranged between $85 and $90 per barrel before the conflict, have skyrocketed to between $150 and $200 per barrel in recent days. The company added that it will suspend its financial forecasts for 2026 due to the uncertainty surrounding the conflict.
The U.S.-Israeli war on Iran has driven oil prices higher, disrupting global travel and sparking fears of a deep recession in the travel sector and a potential large-scale halt in aviation.
Specific Fare Increases
In an emailed response to Reuters, Air New Zealand detailed the following hikes:
Domestic Economy Flights: Increased by NZ$10 ($5.92).
Short-haul International Flights: Increased by NZ$20.
Long-haul Flights: Increased by NZ$90.
While airfares on routes between Asia and Europe have risen due to airspace closures and capacity constraints, Air New Zealand is among the first airlines to announce broad price increases since the war began. The company warned: "If the conflict leads to sustained high jet fuel costs, we may be forced to take further pricing actions and adjust our network and schedule as needed."
Regional Impacts and Government Interventions
Vietnam: Vietnam Airlines has requested local authorities to scrap the environmental tax on jet fuel to help maintain operations. The Vietnamese government stated that airline operating costs have risen by 60% to 70% due to fuel spikes, with suppliers struggling to meet demand.
Fuel Costs: Fuel remains the second-largest expense for airlines after labor, typically accounting for 20% to 25% of operating expenses. While some major Asian and European carriers use fuel hedging to mitigate volatility, U.S. airlines have largely abandoned this practice over the last two decades.
The War and the Travel Industry
Rising fuel prices and airspace closures are severely restricting capacity, pushing fares on certain routes to extreme levels and forcing many to reconsider travel plans ahead of the peak summer season.
Data and Disruptions:
Major Carriers: According to Cirium, an aviation analytics firm, Emirates, Qatar Airways, and Etihad Airways collectively carry about one-third of travelers from Europe to Asia and over half of those traveling from Europe to Australia and New Zealand.
Cancellations: South Korea’s Hana Tour Service has canceled group tours to or through the Middle East (such as Dubai) and is waiving cancellation fees for affected customers. All Middle East-related tours for March will be suspended.
Economic Losses: In Thailand, the Ministry of Tourism predicted that if the conflict lasts more than eight weeks, the country could lose nearly 600,000 tourists and 40.9 billion baht ($1.29 billion) in revenue.
(Exchange rates: $1 = 31.74 Baht | $1 = 1.6892 NZD)
(Source: Reuters)
