Air New Zealand said on
Tuesday it has raised fares due to the West Asia conflict and
may take further pricing action, underscoring how global
airlines will seek to pass on the costs of higher oil prices to
passengers.
Jet fuel prices, which were around $85 to $90 per barrel
prior to the conflict, have increased sharply to between $150
and $200 per barrel in recent days, New Zealand’s flag carrier
said, adding it was suspending its financial outlook for 2026
due to uncertainty over the conflict.
The US-Israeli war on Iran has sent oil prices surging,
upending global travel and sparking fears of a deep travel slump
and the potential for the widespread grounding of planes.
In an emailed response to Reuters, Air New Zealand said it
had raised one-way economy fares by NZ$10 ($5.92) on domestic
routes, NZ$20 on short-haul international services and NZ$90 on
long-haul flights.
While air fares have spiked on Asia-Europe routes due to
airspace closures and capacity constraints, Air New Zealand is
one of the first airlines to announce broad increases to ticket
prices since the start of the war.
“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 carrier said.
As oil prices soar, Vietnam Airlines has asked
local authorities to remove an environment tax on jet fuel to
help it maintain operations. The Southeast Asian nation’s
government said Vietnamese airlines’ operating costs have risen from
60 per cent to 70 per cent due to the rise in jet fuel prices and fuel suppliers
were facing difficulties in meeting airline demand.
Air New Zealand said there was currently no disruption to
jet fuel supplies in New Zealand, but it was working closely
with suppliers and the government to monitor global
developments.
AIRLINE SHARES STABILISE AFTER SELLOFF
In a move that lifted some airline stocks, US President
Donald Trump said on Monday the war could be over soon, sending
markets on a roller coaster, with oil prices retreating to
around $90 a barrel on Tuesday from a high of $119 on Monday.
In Asia, airline shares showed signs of stabilising, with
Air New Zealand up 2 per cent after falling nearly 8 per cent on Monday. Korean
Air Lines rose 6 per cent, after dropping 8.6 per cent a day
earlier, while Australia’s Qantas Airways gained more
than 1 per cent, gaining some ground after falling 4.5 per cent on Monday. Japan
Airlines gained more than 2 per cent.
Fuel is the second-largest expense for air carriers after
labour, typically accounting for a fifth to a quarter of
operating expenses. Some major Asian and European airlines have
oil hedging in place, but US airlines largely stopped the
practice over the last two decades.
High oil prices and airspace closures due to the war are
constraining capacity, pushing airline tickets on some routes
sky-high and forcing some people to reconsider travel plans
ahead of the peak summer season.
CONFLICT TAKES TOLL ON TRAVEL INDUSTRY
High fuel prices could have severe implications for the
global travel industry, with airlines already navigating tight
airspace as pilots reroute to avoid the West Asia conflict and
capacity on popular routes fills up.
Combined, Emirates, Qatar Airways and Etihad normally fly
about one-third of the passengers from Europe to Asia and more
than half of all passengers from Europe to Australia, New
Zealand and nearby Pacific Islands, according to Cirium.
South Korea’s HanaTour Service said it has been
cancelling group tours that include flights to the Middle East,
such as travel to Dubai or itineraries transiting through Dubai
en route to Europe, and it is waiving cancellation fees for
affected customers. All Middle East-related tours for March will
be suspended, it added.
In Thailand, the Ministry of Tourism forecast that if the
conflict drags on for more than eight weeks, the country will
lose a total of 595,974 tourists and 40.9 billion baht ($1.29
billion) in tourism revenue.
($1 = 31.7400 baht)
($1 = 1.6892 New Zealand dollars)