.jpg)
Airlines worldwide are adjusting ticket prices and scaling back flight capacity in response to a sudden spike in oil prices, a shift that could test the industry’s profitability if higher travel costs discourage passengers.
Prior to the escalation of the U.S.-Israeli conflict involving Iran last month, the aviation sector had projected record profits of $41 billion for 2026. However, a sharp increase in jet fuel costs—reportedly doubling in recent weeks—has disrupted those expectations, prompting carriers to reassess their operations and route networks.
Major airlines, including United Airlines, Air New Zealand, and Scandinavian Airlines, have already announced capacity reductions alongside fare increases. Others have introduced or expanded fuel surcharges to offset rising expenses.
Industry experts warn that airlines are facing conflicting pressures. Rigas Doganis, former head of Olympic Airways and a past director at easyJet, described the situation as a “perfect storm,” noting that carriers may need to lower fares to stimulate weakening demand even as higher fuel costs push them in the opposite direction.
The sector had enjoyed a strong recovery in 2025, with global passenger traffic reaching levels approximately 9% above those seen before the COVID-19 pandemic. Robust demand and supply-chain constraints, particularly delays in aircraft deliveries, had allowed airlines to maintain high seat occupancy and exert pricing power.
However, the scale of fare increases required to offset fuel costs could prove challenging, especially as households face higher gasoline prices that may limit discretionary spending on travel.
Analysts suggest capacity reductions may be the primary tool airlines use to support pricing. Andrew Lobbenberg, head of European transport equity research at Barclays, said cutting available seats is often the most effective way to drive fares higher during periods of crisis.
Airlines have already begun signaling the extent of potential fare hikes. The chief executive of United Airlines, Scott Kirby, recently indicated ticket prices may need to rise by around 20% to cover fuel costs.
Meanwhile, Cathay Pacific has increased fuel surcharges twice in the past month. From Wednesday, passengers flying return economy routes between Sydney and London will face an additional $800 surcharge, compared to a typical pre-crisis fare of about A$2,000 ($1,369.60).
Low-cost carriers are expected to be particularly vulnerable, as their customer base tends to be more sensitive to price increases. Analysts note that some travelers may shift to alternative transport options, such as rail or bus services, especially for short-haul journeys.
The current পরিস্থিত represents the fourth major oil shock for the aviation industry since the early 2000s. Previous disruptions occurred during the 2007–2008 pre-financial crisis period, following the Arab Spring in 2011, and after the outbreak of the Russia-Ukraine war in 2022.
This time, additional concerns have emerged over fuel supply security, particularly due to the closure of the Strait of Hormuz, a critical energy transit route. Airlines such as Vietnam Airlines have raised concerns about access to physical fuel supplies.
While airlines have sought to improve efficiency by modernizing fleets, supply-chain disruptions and technical issues with next-generation aircraft engines have delayed deliveries, limiting their ability to reduce fuel consumption.
Industry consolidation in the United States over the past decade has also reshaped the sector, with mergers such as Delta-Northwest and American Airlines-US Airways reducing the number of major carriers and enabling tighter capacity management. Meanwhile, low-cost operators like Ryanair and IndiGo have focused on streamlined fleets and rapid turnaround times to control costs.
According to aviation consultancy IBA, the current crisis is likely to widen the gap between stronger and weaker airlines. Companies with solid financial reserves and access to capital are expected to better withstand prolonged cost pressures, while those with weaker balance sheets may face growing financial strain.
Source: ZAWYA
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
 (1).jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)