Global aviation industry sounds the alarm! Has the Middle East conflict "burned" your flight tickets?

Ask AI · How are airlines responding to cost pressures?

【Text / The Observer Network Deng Jun Editing / Zhao Qiankun】

Rising fuel prices send a clear signal: conflicts in the Middle East are spreading globally, and airlines worldwide are facing the most severe market challenges since the COVID-19 pandemic.

According to Reuters UK on March 17, the surge in aviation fuel prices triggered by U.S.-Israel military actions against Iran has sounded an alarm across the global aviation industry. Industry experts are concerned that this will add hundreds of millions of dollars in extra costs, increase passenger ticket prices, and potentially lead to route reductions.

Currently, global airlines are trying to offset losses caused by geopolitical conflicts by adjusting or canceling flights and increasing fuel surcharges.

As a pillar industry of the world economy, the tourism sector generates an annual output of $11.7 trillion, and its recovery prospects are thus overshadowed.

High Fuel Costs Compress Airline Profit Margins

Fuel is the second-largest expense in the airline industry after labor costs, typically accounting for 20% to 25% of total operating costs. Since U.S.-Israel airstrikes against Iran at the end of February, fuel prices have continued to rise, becoming an urgent challenge for airlines worldwide.

As of March 17, the NYMEX crude oil futures for April delivery closed at $96.21 per barrel, up 2.90%; Brent crude oil futures for May delivery closed at $103.42 per barrel, up 3.20%.

Delta Air Lines CEO Ed Bastian stated that in March alone, soaring fuel prices increased the company’s costs by about $400 million. American Airlines also expects that rising fuel costs will increase expenses by $400 million in the first quarter of 2026. The industry is rapidly passing these costs onto passengers through higher ticket prices.

Several international airlines have recently announced flight reductions or fare increases: Scandinavian Airlines (a joint venture of Sweden, Denmark, and Norway) has cut some flights due to “sharp increases” in fuel prices; Air France-KLM plans to raise long-haul flight fares to offset costs; airlines such as Air New Zealand, Singapore Airlines, Japan Airlines, Lufthansa, Emirates, Qatar Airways, and Etihad Airways have also announced suspensions or extensions of some routes.

In the Chinese market, according to Flight Master DAST, affected by international tensions, the number of flights between China and the Middle East has rebounded to over 40 daily after March 15, but the cancellation rate remains at 59.2%, and overall flights have not returned to early February levels. As of March 17, the overall recovery rate for China-UAE routes is only 15%, and for China-Saudi routes, about 50%, showing a decline from previous levels.

Global Airlines Generally Increase Fuel Surcharges

To cope with rising international fuel prices, many airlines worldwide have announced or increased fuel surcharges.

In China, Spring Airlines has adjusted fuel surcharge standards for international routes to Japan, Korea, Thailand, Cambodia, Vietnam, Singapore, Malaysia, and others starting from midnight on March 12 (booking date), with increases up to 180 yuan on several routes.

Xiamen Airlines, from March 16 (ticketing date), adjusted fuel surcharge standards for flights between Indonesia and mainland China, increasing from 640,000 IDR to 736,000 IDR.

Juneyao Airlines, from March 16 (ticketing date), adjusted fuel surcharges for routes between China and Finland: for flights originating from Europe, Middle East, Africa, the surcharge per segment is 150 euros; for non-Europe, Middle East, Africa, it is 1,431 yuan. From March 20, the surcharges for routes between China and Vietnam, China and Indonesia are adjusted to 400 yuan and 600 yuan respectively; routes between China and Thailand, Singapore, Malaysia, the Philippines, Laos, Myanmar, Cambodia, and other Southeast Asian countries are adjusted to 550 yuan per segment.

Additionally, several Hong Kong-based airlines, including Cathay Pacific, HK Express, Hong Kong Airlines, and Greater Bay Airlines, have announced adjustments to passenger fuel surcharges. For example, Cathay Pacific has doubled fuel surcharges on many international routes, while other Hong Kong airlines have generally increased by 50% to 100%. However, for flights between mainland China and Hong Kong, the surcharge remains unchanged for Cathay Pacific, HK Express, and Greater Bay Airlines, with only Hong Kong Airlines making a slight increase.

Some ticket agents have received notices that fuel surcharges for China Eastern Airlines’ international routes will be adjusted gradually from early morning on March 18: China Southern Airlines will also adjust international fuel surcharges in batches, with increases of 100 yuan to Southeast Asia, 270 yuan to Australia, 150 yuan to the UAE, 250 yuan for economy class to the U.S., and 500 yuan for business class.

International airlines such as Indigo Airlines (India), Air India, Akasa Airlines (India), Thai International Airways, AirAsia (Malaysia), Safair (South Africa), Qantas (Australia), Transat Airlines (Canada), Scandinavian Airlines (Sweden, Denmark, Norway), and Chatham Airlines (New Zealand) have also announced fuel surcharge increases.

International Air Transport Association (IATA) Director Willie Walsh recently predicted that global airfares could rise by an average of 9%. Reuters pointed out that while surcharges can alleviate cost pressures, they may also erode already thin airline profit margins and suppress market demand.

Analysts note that once crude oil prices double, the impact on aviation fuel costs will be swift. Given the generally low profit margins of airlines, their capacity to absorb such significant cost increases is limited, and profitability could be severely squeezed.

Regional Tourism Recovery Faces Uncertainty

According to the UK’s “Tourism Review,” before the current conflict, Middle Eastern tourism generated nearly $460 billion annually, significantly boosting the economies of major cities like Amman (Jordan’s capital) and Jeddah (Saudi Arabia’s second-largest city). However, the current situation has sharply deteriorated industry prospects, with global traveler confidence rapidly declining.

The report mentions that the military conflict in the Middle East is unprecedented in directly impacting key tourism destinations within Gulf Cooperation Council countries, a situation not seen in past regional instability.

The UK’s “Tourism Economics” magazine estimates that even if military operations end within a few weeks, the number of international visitors to the Middle East in 2026 could still decrease by about 11% year-over-year, a reduction of approximately 23 million tourists and a loss of about $34 billion in tourism spending. If the conflict lasts around two months, the decline could intensify, with international tourist numbers dropping by 27%, equating to a loss of 38 million visitors and approximately $56 billion in tourism revenue.

“Tourism Review” believes that even if military actions cease, cautious market sentiment will persist for a long time, suppressing tourism demand: short-term conflicts may keep travel confidence low through the second quarter, with a slow recovery afterward; prolonged conflicts and fears of escalation could further suppress travel bookings to the Middle East throughout 2026.

The World Travel & Tourism Council (WTTC) states that the ongoing conflict in the Middle East is causing daily losses of at least $600 million in regional tourism spending. Disruptions to air travel, declining traveler confidence, and connectivity issues are impacting tourism demand across the region.