finance
Airlines Cut Flights and Raise Prices Amid High Fuel Costs From Iran War
Rising jet fuel prices due to the Iran War have prompted airlines to cancel flights, reduce capacity, and increase fares. Budget carriers are seeking a $2.5 billion U.S. government rescue package, while major airlines like Southwest report impacts on earnings. The closure of the Strait of Hormuz has squeezed global supplies, affecting summer travel plans.
Apr 23, 8:34 AM·2m read5 sources
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Airlines worldwide are grappling with soaring jet fuel prices triggered by the ongoing Iran War, leading to flight cancellations, capacity reductions, and higher ticket prices. The conflict, involving the U.S. and Israel against Iran, has closed the Strait of Hormuz since early March, disrupting a key oil supply route.
This has doubled jet fuel costs in recent months, forcing carriers to adjust operations. Budget airlines including Frontier and Avelo have requested a $2.5 billion rescue package from the U.S. government to offset these expenses. The aid could involve equity stakes for the government in the airlines.
Separately, thousands of European flights have been canceled, with one airline potentially halting operations entirely.
Several airlines serving the UK have announced plans to operate fewer flights, including KLM, Air Canada, Asiana Airlines, Delta Airlines, Lufthansa, and SAS. In contrast, British Airways owner IAG, EasyJet, and Jet2Holidays have stated they will maintain their schedules.
Low-cost carrier Volotea has added surcharges to already-sold tickets, drawing challenges from consumer rights groups. Other airlines are raising fares or adding fees for luggage, such as Air France-KLM, Indigo, Pakistan International Airlines, Thai Airways, Turkish Airlines-Sun Express, and Virgin Atlantic.
Long-haul routes via Asia have seen the sharpest increases, with flights from London to Melbourne up 76% and to Hong Kong up 72% compared to last year. However, the carrier forecasts second-quarter earnings between 35 cents and 65 cents per share, below analyst estimates of 55 cents, due to higher fuel prices.
Southwest expects capacity to remain flat or grow by up to 1%, with unit revenues rising 16.5% to 18.5%. Southwest Airlines CEO Bob Jordan stated that customers continue booking despite higher fares, showing strength across sectors. The airline has implemented changes like checked bag fees and seat assignments to boost revenue, ending its open-seating policy in January.
