OMNIFeatures｜Oil Price Surge Amid Iran Conflict Forces Airlines to Raise Ticket Prices As Much As 9%

The escalating conflict involving Iran has pushed global oil prices sharply higher, prompting a growing number of airlines to increase ticket prices. Industry analysts estimate airfares could rise by as much as 9%, with elevated prices likely to persist for several months as carriers grapple with mounting fuel costs.

According to reports by The Guardian and Bloomberg, Cathay Pacific, AirAsia and Thai Airways have joined Qantas in raising fares. The Middle East conflict has driven up oil prices while also redirecting passenger flows toward alternative transit hubs in Asia, further tightening capacity and placing upward pressure on ticket prices.

The surge in oil prices follows military actions by the United States and Israel against Iran, which have disrupted refinery operations across several Middle Eastern oil-producing countries. Aviation experts warn that even if hostilities ease, the impact on airfares could linger for months. While some airlines hedge fuel purchases at fixed prices, these strategies often do not cover the refining costs required to convert crude oil into jet fuel, leaving carriers exposed to price volatility.

Cathay Pacific Chief Executive Ronald Lam told investors on June 11 that the airline has no hedging in place for refining costs and only about 30 percent coverage for fuel expenses. As a result, the company plans to increase fuel surcharges for passengers to offset the surge in operational costs.

Other carriers have taken similar steps. AirAsia announced on June 12 that it would raise ticket prices and fuel surcharges while adjusting them in line with market fluctuations. Thai Airways has indicated fares could increase by 10 to 15 percent. Qantas and Air New Zealand also raised prices earlier, with Air New Zealand additionally canceling thousands of flights scheduled between March 16 and May 3, affecting an estimated 44,000 passengers.

Flight disruptions and cancellations across the Middle East have forced travelers to seek alternative routes, driving a surge in demand on other long-haul corridors and pushing short-term ticket prices even higher. For example, Cathay Pacific business-class tickets from Sydney to London in mid-April have reached as high as AUD 39,577 (approximately TWD 890,000), while economy-class fares on the same route exceed AUD 3,000.

The International Air Transport Association (IATA) estimates global ticket prices could increase by around 8% to 9%. IATA Director General Willie Walsh noted that fuel accounts for roughly 25% of airline operating costs. Airlines in emerging markets face even greater pressure, as they must contend with both rising fuel prices and weakening local currencies. Despite these challenges, global travel demand remains resilient, with many trips originally planned for the Middle East redirected to Europe or Asia. IATA still forecasts global passenger traffic will grow by 4.4% this year.