SINGAPORE, SINGAPORE – Asian airlines raised fares and drafted emergency plans, including potential fleet groundings, as soaring jet fuel costs eroded already thin margins.
Ticket prices surge across key Asian markets
Carriers in India increased long-haul ticket prices by about 15 percent, according to people familiar with the matter, and explored further markups. In Vietnam, state media warned that airfares could climb by as much as 70 percent due to the country’s dependence on imported jet fuel.
Low-cost airlines in particular came under pressure if the situation lasted longer than three months. Industry sources said operators were assessing how far customers would tolerate higher prices before demand weakened.
Hong Kong Airlines lifts fuel surcharges
Hong Kong Airlines announced on Tuesday that it would raise fuel surcharges on numerous routes from 12 March. The carrier planned an additional HK$5 on flights to mainland China and HK$150 more on long-haul services, including to North America.
These increases added to broader cost pressures from jet fuel, which typically represented one of the largest single expenses for airlines. The measures also highlighted how carriers tried to pass at least part of the fuel shock on to passengers.
Weak hedging leaves region exposed
Many airlines in Asia were less heavily hedged against oil price spikes than competitors in Europe or the United States and therefore felt fuel shocks more quickly in their finances. Insiders said low-cost carriers in Southeast Asia were running scenarios in which aircraft could be left on the ground if fuel became unaffordable or supply chains broke down.
Operators viewed full or partial grounding only as a last resort but did not rule it out in extreme situations. Contingency plans ranged from cutting unprofitable routes to sharply reducing frequencies.
SpiceJet flags grounding risk as last resort
Ajay Singh, chairman of Indian budget airline SpiceJet Ltd, questioned on Bloomberg TV whether flying still made sense if every rotation burned cash.
“Airlines in India have no choice but to introduce a fuel levy, because the costs cannot be fully absorbed,”
said Ajay Singh, chairman of SpiceJet Ltd.
His comments underlined how quickly profitability could evaporate when fuel costs spiked. Industry insiders warned that low-margin budget carriers could fail within a little more than three months under current conditions.
Oil volatility upends planning
Oil prices shot towards US$120 per barrel on Monday before retreating after US President Donald Trump signalled that the war could soon end. He also indicated that oil-related sanctions might be eased and that tankers could be escorted through the Strait of Hormuz by the US Navy.
This chokepoint usually handled about one fifth of global crude shipments, making it critical for jet fuel supply. The rapid price swings complicated airlines’ budgeting and route planning, as fuel assumptions became outdated within days.
Analysts hit the panic button
The current jet fuel prices had triggered panic throughout the industry, according to market specialists.
“The current jet fuel prices have pushed panic buttons everywhere,”
said June Goh, senior oil market analyst at Sparta Commodities SA.
An industry insider warned that low-cost airlines with slim profit margins could collapse if the environment persisted for more than three months. In a note, Michael Linenberg of Deutsche Bank AG even considered a global grounding of thousands of aircraft possible.
Air New Zealand suspends guidance as markets swing
Air New Zealand Ltd suspended its earnings guidance on Tuesday, saying extreme jet fuel volatility had invalidated assumptions from less than two weeks earlier. The move underscored how fast the operating environment for airlines had changed.
Market sentiment remained nervous but volatile. The BI Asia Pacific Airlines Index rebounded after eight days of losses, while AirAsia X Bhd jumped at one point by more than 14 percent on Tuesday following a sharp earlier slump.
Lufthansa sees edge from hedging strategy
Carsten Spohr, CEO of Deutsche Lufthansa AG, said last week the group enjoyed a “relative advantage” from its fuel hedging when rivals were forced to raise ticket prices. The German carrier’s strategy partially shielded it from immediate oil price shocks.
At the same time, Lufthansa shifted more capacity to Asia and Africa routes because major airlines and hubs in the Middle East still could not operate normally. That reallocation aimed to capture demand in markets less directly affected by regional disruptions.