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By Aliss Higham
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Airlines are increasing ticket prices and cutting back flight schedules worldwide as jet fuel costs surge at an extraordinary pace, driven by rising oil prices linked to the U.S.-Israel war on Iran.
According to the International Air Transport Association (IATA), the average global jet fuel price jumped to $197 per barrel for the week ending March 20, up from $157.41 just two weeks earlier and nearly double the $95.95 recorded a month prior on February 20. That rapid escalation has left carriers scrambling to offset costs while maintaining operations.
Brent crude, the global oil benchmark, briefly reached $119 per barrel this week, close to its highest level since the conflict began.
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Raising Prices
Many airlines have responded by increasing fares, though the extent varies by carrier and route.
Cathay Pacific said it would increase prices along certain routes by implementing a fuel surcharge on tickets bought from April 1 onward.
“The ongoing volatile situation in the Middle East continues to have a significant impact on the price of jet fuel and this is placing considerable pressure on airlines around the world,” the airline said.
It added that jet fuel costs are driven by both crude oil and refining components, “both of which have increased significantly in recent weeks.”
The airline has applied fare increases on selected long-haul routes, including connections between Hong Kong and regions such as North America, Europe, the Middle East and Africa, as well as routes linking Japan and the U.S., and Brazil with destinations including the U.S., United Kingdom and France.
Air New Zealand has raised one-way economy fares by 10 New Zealand dollars ($5.70) on domestic routes, 20 New Zealand dollars on short-haul services and 90 New Zealand dollars on long-haul flights. Air France-KLM has also implemented a surcharge on long haul flights: 50 euros ($57.63) per round trip.
Australian flag-carrier Qantas has also confirmed fare hikes on its international network.
Thai Airways has said it is raising ticket prices by 10 percent to 15 percent. The airline’s chief financial officer, Cherdchom Thetsathirasak, said the move is aimed at offsetting fuel costs while responding to “overwhelming” demand, as travelers shift itineraries away from the Middle East toward Europe.
AirAsia, a low cost carrier that operates predominately across Central and South East Asia, has acknowledged that increases are unavoidable but says it will try to limit their impact.
CEO Tony Fernandes said: “We will not be canceling flights as demand is good. We are doing our best to keep fares as low as possible, but we will require support from other parts of the aviation ecosystem.
“Fares will have to go up; there is no two ways about it, but our fares will increase much less than others.”
Flight Cancellations
Some airlines are cutting flights to manage the financial strain of increased fuel costs.
United Airlines plans to cancel about 5 percent of its scheduled flights in the short term. CEO Scott Kirby warned that maintaining current fuel prices would add $11 billion to the airline’s annual costs, which is more than double the profit it has achieved in its best year.
Scandinavian carrier SAS is taking similar steps, canceling at least 1,000 flights in April after already cutting several hundred in March. CEO Anko van der Werff said the airline is attempting to “protect our traffic as much as possible,” but expects further reductions after Easter, when demand typically declines.
Air New Zealand, as well as raising fares, is also reducing capacity. The airline has cut services by 5 percent, canceling approximately 1,100 flights between March 16 and May 3.
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