Middle East tensions raise pressure on airline fares

March 11 (Asia Today) -- Rising volatility in global oil prices linked to tensions in the Middle East is increasing pressure on airline ticket prices as carriers face higher fuel costs.

Fuel expenses account for a significant portion of airline operating costs, and analysts say sustained increases in oil prices could eventually affect both airfare levels and fuel surcharges.

According to foreign media reports including The New York Times, global oil prices surged after U.S. and Israeli strikes on Iran, briefly approaching $120 per barrel before retreating to the $80 range.

Jet fuel prices have also climbed sharply. As of March 6, aviation fuel prices were more than 58% higher than the previous week.

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Some international airlines have already begun adjusting fares. Scandinavian Airlines and Air New Zealand recently announced fare increases citing rising jet fuel costs.

Major U.S. airlines have not yet announced formal fare increases. United Airlines Chief Executive Officer Scott Kirby said higher oil prices could push ticket prices up in the short term but predicted fares would stabilize if the conflict subsides.

South Korean airlines say they are closely monitoring the situation.

A Korean Air official said the company has implemented fuel hedging strategies based on its projected annual fuel consumption and will continue monitoring global oil price movements.

One of the first areas where rising oil costs could affect travelers is the fuel surcharge, an additional fee added to airline tickets based on global fuel prices.

International flight fuel surcharges for April will be calculated using the average Singapore jet fuel price between Feb. 16 and March 15. The updated surcharge level is scheduled to be announced on March 16.

Airlines say the sharp fluctuations in oil prices make it difficult to predict whether the surcharge will increase or by how much.

Fuel costs represent a major financial variable for airlines. Korean Air, for example, consumed about 30.5 million barrels of fuel annually as of the third quarter of last year. A $1 change in oil prices can affect the company's profit or loss by about $30.5 million, or roughly 44.7 billion won ($30.5 million).

Low-cost carriers may face greater pressure because of their thinner financial margins and reliance on low fares.

Industry officials from several budget airlines said they are continuing to monitor oil price movements before making pricing decisions.

However, aviation experts say domestic airlines in South Korea may have limited ability to raise fares quickly.

Airfares require approval from the Ministry of Land, Infrastructure and Transport, making significant fare increases difficult without government authorization, an industry official said.

"With oil prices recently falling again, we need to see whether the market stabilizes," the official said.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260311010003251