More airlines hike flight prices as Iran war continues to disrupt oil supply

## Summary
Photograph: Peter Parks/AFP/Getty Images More airlines hike flight prices as Iran war continues to disrupt oil supply Cathay Pacific, AirAsia and Thai Airways join Qantas in increasing prices, as travellers flock to airlines that don’t have Middle East stopovers Cathay Pacific, AirAsia and Thai Airways are among a growing number of airlines hiking air fares as conflict in the Middle East boosts oil prices and sends travellers flocking to alternative stopover destinations in Asia. Cathay Pacific planned to increase fuel surcharges for travellers as it had hedged none of the refiner’s margin and only 30% of its fuel costs, its chief executive, Ronald Lam, told investors on Wednesday. “Since jet fuel has almost doubled [in price], I think we’ll be making an announcement about increasing fuel surcharges for both travel and cargo in due course,” he said. Taylor said it was unlikely that flight prices would increase drastically on domestic flights in Australia and to nearby south-east Asian destinations such as Bali as they use less jet fuel and are serviced by more carriers, but “every airline’s going to feel the impact of fuel prices,” he said. Even if hostilities ended immediately, it would take about two months for airlines to be confident they could lower the prices of forward bookings, he said. “It’s not that they want to make huge profits,” Merkert said. “It’s pure survival for some of them.” For travellers hoping to fly in September or later, it may be better to wait in case the war ends imminently, Merkert said. “I would probably just wait and see for the next two weeks … whether this will be prolonged war or whether they can come to an agreement very quickly.” Bookings site WebJet reported Australians have already cut back on long-haul flights, swapping to domestic destinations and others nearby in the Asia-Pacific region.

## Article Content
Cathay Pacific is selling A$39,577 business class return trips from Sydney to London for mid-April. Its economy class fares for the same route cost more than A$3,000.
Photograph: Peter Parks/AFP/Getty Images
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Cathay Pacific is selling A$39,577 business class return trips from Sydney to London for mid-April. Its economy class fares for the same route cost more than A$3,000.
Photograph: Peter Parks/AFP/Getty Images
More airlines hike flight prices as Iran war continues to disrupt oil supply
Cathay Pacific, AirAsia and Thai Airways join Qantas in increasing prices, as travellers flock to airlines that don’t have Middle East stopovers
Cathay Pacific, AirAsia and Thai Airways are among a growing number of airlines hiking air fares as conflict in the Middle East boosts oil prices and sends travellers flocking to alternative stopover destinations in Asia.
The US and Israel’s war on Iran has sent the price of oil soaring while restricting access to refineries, with experts predicting air fares could be elevated for months even if the conflict ends.
Some airlines have locked in the price of a portion of their crude oil purchases but not the costs of refining that into jet fuel, leaving them exposed to price shocks.
Cathay Pacific planned to increase fuel surcharges for travellers as it had hedged none of the refiner’s margin and only 30% of its fuel costs, its chief executive, Ronald Lam, told investors on Wednesday.
“Since jet fuel has almost doubled [in price], I think we’ll be making an announcement about increasing fuel surcharges for both travel and cargo in due course,” he said.
AirAsia announced it would temporarily increase fares and fuel surcharges on Thursday, promising to re-adjust as market conditions changed. The airline declined to comment on reports it had not locked in its fuel prices.
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Thai Airways authorities have told investors and media outlets they expect air fares to increase by 10% to 15%. Qantas and Air New Zealand
on Tuesday said they had lifted prices
, with the latter adding on Thursday it would cancel thousands of flights from 16 March to 3 May, affecting about 44,000 passengers.
Flight cancellations and disruptions through the Middle East have also driven up prices in the short term by pushing international travellers on to alternative routes, generating surging demand.
Cathay has
attracted attention
for selling A$39,577 business class return trips from Sydney to London in mid-April. Its economy class fares for the same route cost more than A$3,000.
Flights from Australia to Europe and from India to the US – routes typically travelled via the Middle East – had seen especially significant boosts, Lam said.
Long routes with few carriers operating were likely to see the biggest prices increases, especially routes formerly serviced by airlines such as Emirates, Etihad and Qatar, according to Ellis Taylor, analyst at aviation analytics company Cirium.
Australian connections to Europe, North America and north Asia would probably see prices rise higher and faster, he said.
Taylor said it was unlikely that flight prices would increase drastically on domestic flights in Australia and to nearby south-east Asian destinations such as Bali as they use less jet fuel and are serviced by more carriers, but “every airline’s going to feel the impact of fuel prices,” he said.
Bookings made in the next two weeks were likely to be more expensive and the number of flights on offer has appeared to fall – even as far in advance as July – which puts pressure on fares, Taylor said.
Customers hoping to fly in coming months would be better to book immediately to avoid widespread price hikes of up to 30%, according to Rico Merkert, transport professor at the University of Sydney.
Even if hostilities ended immediately, it would take about two months for airlines to be confident they could lower the prices of forward bookings, he said.
“It’s not that they want to make huge profits,” Merkert said. “It’s pure survival for some of them.”
For travellers hoping to fly in September or later, it may be better to wait in case the war ends imminently, Merkert said.
“I would probably just wait and see for the next two weeks … whether this will be prolonged war or whether they can come to an agreement very quickly.”
Bookings site WebJet reported Australians have already cut back on long-haul flights, swapping to domestic destinations and others nearby in the Asia-Pacific region.
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## Expert Analysis

### Merits
- AirAsia announced it would temporarily increase fares and fuel surcharges on Thursday, promising to re-adjust as market conditions changed.
- Flights from Australia to Europe and from India to the US – routes typically travelled via the Middle East – had seen especially significant boosts, Lam said.

### Areas for Consideration
N/A

### Implications
- The US and Israel’s war on Iran has sent the price of oil soaring while restricting access to refineries, with experts predicting air fares could be elevated for months even if the conflict ends.
- The airline declined to comment on reports it had not locked in its fuel prices. ‘Where do we go?’ What it’s like being an airline pilot when missiles start crossing your flight path Read more Thai Airways authorities have told investors and media outlets they expect air fares to increase by 10% to 15%.
- Qantas and Air New Zealand on Tuesday said they had lifted prices , with the latter adding on Thursday it would cancel thousands of flights from 16 March to 3 May, affecting about 44,000 passengers.
- Taylor said it was unlikely that flight prices would increase drastically on domestic flights in Australia and to nearby south-east Asian destinations such as Bali as they use less jet fuel and are serviced by more carriers, but “every airline’s going to feel the impact of fuel prices,” he said.

### Expert Commentary
This article covers prices, fuel, fares topics. Notable strengths include discussion of prices. Readability: Flesch-Kincaid grade 0.0. Word count: 770.