SINGAPORE — Amid the ongoing war in the Middle East, the head of the International Air Transport Association (IATA) said on Tuesday air fares increased related to costs, capacity and margins. Willie Walsh said: “Without knowing the length and intensity of the war in the Middle East, it is impossible to quantify the full impact that it will have on airline prospects. “But some things are already clear. Fuel costs have risen sharply. With tight capacity and thin margins, air fares are already rising.” The cost of crude oil has surged by more than 50% since the conflict began on 28 February, while global jet fuel prices have more than doubled. The IATA said in a press release that total demand for air carriers in February was up by 6.1% on a yearly basis, while the demand was up by 5.9% for international and 6.3% for domestic routes. Walsh added: “However, capacity deployment is also adjusting, particularly for traffic to, from, or through the Middle East, or in areas where fuel supply is an issue. “Capacity growth scheduled for March, for example, has eased to 3.3% from earlier predictions of more than 5%.” Several Asian airlines have announced measures to deal with the economic impact of the ongoing US-Israel war with Iran. Korean Air said it is moving into emergency management mode to buffer the impact of surging jet fuel costs. A spokesperson for the national flag carrier said on Tuesday that it will implement “internal cost-reduction measures” to manage its finances to ensure the firm’s “stability amidst rising fuel prices and global economic uncertainty”. South Korea is especially vulnerable to energy supply disruptions from the Middle East as it is heavily reliant on oil from the Gulf. In recent days, several of the country’s carriers, including Korean Air, Asiana Airlines and Busan Air, have entered emergency management mode. The measures are typically internal, such as slowing upgrades or other investments, but some airlines may reduce the number of flights to cut costs, Tan said. Korean Air employees were first notified about the emergency measures. Vice Chairman Woo Ki-hong told staff members the airline is preparing for “a surge in fuel expenses”. It will cut costs through measures based on the price of oil, Woo wrote, adding that the moves are “not merely a one-time” initiative but a chance to “strengthen our structural foundation”. Despite being a major energy producer, China is the world’s biggest importer of oil, making its aviation industry susceptible to global energy shocks. China Eastern Airlines, one of the country’s largest state-owned carriers, warned on Monday that global disruptions could weigh on its operations this year. The airline said trade conditions and “geopolitical conflicts or wars will have a relatively significant impact” on the aviation sector, which could affect its performance. Many Chinese airlines have raised their fuel surcharges on flights since the Iran war started. In Hong Kong, Cathay Pacific said that a fuel surcharge has been included on all flights, with many of its fares rising sharply. Japan’s All Nippon Airways (ANA) has said it will not be raising fuel surcharges for tickets issued in April and May as prices were set before the Iran war. The immediate impact of rising energy costs is “limited” for now due to the existing surcharges and measures that the airline has taken to secure fuel prices in advance, a spokesperson for ANA said. Meanwhile, Japan Airlines said it had taken no specific actions yet regarding fuel shortages. Some prices of flights, such as trips between Japan and Europe, have risen due to an increase in demand after the closure of the carrier’s Middle East routes, Japan Airlines said. India’s aviation industry has been hit hard by the cancellation of flights to the Middle East, the biggest market for its international airlines. But there is still demand for flights into the Middle East, with carriers like Air India making daily updates on newly-scheduled flights to the region. India’s aviation authority said last week that it expected the country’s airlines to fly roughly 10% fewer domestic flights between March and October this year. Singapore Airlines and its budget carrier Scoot have put up fares in response to the steep rise in jet fuel prices, a spokesperson said. Fuel costs are the airline group’s single biggest expense and accounted for around 30% of its spending in recent months, the spokesperson added. Singapore’s civil aviation authority also said it is postponing a green jet fuel levy which was due to kick in from April 2026, due to the impact of the Iran war. On 24 March, the Philippines became the world’s first country to declare a state of national energy emergency in response to the Iran war. President Ferdinand Marcos also said that grounding planes due to a shortage of fuel is a “distinct possibility” after some of the country’s airlines were told that they cannot refuel their jets abroad. Earlier this month, Vietnam’s aviation agency warned that it could face jet fuel shortages as early as April because suppliers are delaying deliveries. Vietnam Airlines has suspended several domestic flights. The South East Asian country imports almost 90% of its oil from the Middle East. Experts have said larger airlines will generally have more options to deal with the impact of the energy crunch. They are able to redeploy their jets to capitalise on the gap left by Gulf-based airlines which have planes stranded in the Middle East, said Bryan Terry from Alton Aviation Consultancy. Singapore Airlines has added more flights to London, while Australia’s Qantas Airways has increased the number of trips to Europe. Both are routes flown by Gulf carriers. Major airlines are also able shift their long-haul jets to routes with stronger demand and customers who are willing to pay higher prices, Terry said. Qantas said it is moving larger aircraft that it typically uses for US flights to routes to Europe, which has seen an uptick in demand in recent weeks. Meanwhile, smaller carriers like Qantas’ budget carrier Jetstar are cutting back some flights. — Agencies
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