Plane ticket prices likely to increase as jet fuel prices jump amid Iran conflict

Airlines around the world are facing rising fuel costs as the war in the Middle East disrupts global oil supplies, a development that could soon push airfares higher ahead of the busy summer travel season.

Industry experts say ticket prices are likely to increase, with the key questions now being how quickly fares will rise, how long the trend will last and how significant the increases will be. The effect may be most noticeable on long-haul international routes, which consume far more fuel than shorter domestic flights, according to reports by  American media outlets.

Some carriers have already begun responding to higher costs by raising ticket prices or introducing fuel surcharges. In the United States, United Airlines CEO Scott Kirby recently warned that airfare increases will “probably start quick" as rising fuel prices ripple through the industry.

The conflict has disrupted oil exports and created logistical challenges for major producers in the region. Countries including Kuwait, Saudi Arabia and Iraq have reportedly scaled back output as shipments face growing obstacles.

Fuel typically represents between 20% and 25% of an airline’s operating costs, making it the second-largest expense after labour, according to Rob Britton, an adjunct marketing professor at Georgetown University and a retired executive from American Airlines, speaking to ABC News. A sudden surge in energy prices can therefore have a major impact on airline budgets.

The same volatility that has pushed up retail gasoline prices has also driven a sharp rise in jet fuel costs. Data from the Argus US Jet Fuel Index show that the average price of jet fuel in the United States reached $3.99 per gallon on March 13, compared with $2.50 per gallon the day before the conflict began two weeks earlier. The index tracks average jet fuel prices paid by airlines at major US airports.

By comparison, statistics from the US Bureau of Transportation Statistics indicate that American airlines paid roughly $2.36 per gallon for fuel in January, the most recent data available.

Practical fallouts for travellers

Some airlines attempt to shield themselves from sudden fuel price spikes through fuel hedging, a strategy that allows carriers to lock in fuel prices months or even years in advance. However, not all airlines use this approach, and those that do usually hedge only part of their fuel needs, meaning sustained price increases could still lead to higher ticket prices.

Operational challenges are also increasing costs. Airspace closures linked to the conflict have forced airlines to reroute flights around parts of the Middle East, resulting in longer flight paths, higher fuel consumption and additional operating expenses.

Travellers may notice the effects in several ways. Airlines can impose or increase fuel surcharges, an extra fee added on top of the base ticket price.

In other cases, carriers may incorporate higher fuel costs directly into ticket prices, meaning increases could appear as higher base fares, according to Tyler Hosford, security director at the risk management firm International SOS.

Airlines may also adjust prices for optional services such as seat upgrades, extra legroom, checked baggage or priority boarding as another way to offset higher costs. As a result, even if base fares remain stable initially, the total cost of travel could still rise once additional fees are included.

If fuel prices remain elevated for an extended period, airlines may also adjust flight schedules or reduce certain routes, said Christopher Anderson, a professor at Cornell University whose research focuses on operations in the hospitality and airline industries.

By Nazrin Sadigova