British Airways Says Airlines Will Raise Fares Due to Higher Fuel Costs From Iran Conflict

The chief executive of British Airways said all airlines will need to increase fares to mitigate the impact of rising jet fuel prices resulting from the war with Iran. The conflict has led to the closure of the Strait of Hormuz, disrupting fuel supplies and driving costs higher across the globe.

Jet fuel currently accounts for a quarter of British Airways' operating costs. The executive stated the business is managing the uncertainty caused by increased fuel prices. He said British Airways would take necessary action on yields, costs and capacity.

He added that while the higher fuel price will lead to lower profit this year than originally anticipated, the company remains confident in its business model and strategy. The company said there is less jet fuel coming from the Middle East but does not expect any interruption for the summer.

It has been planning for situations like this for many years and had invested in its own jet fuel supply at its main hubs. Markets like Asia that were weaker in terms of fuel supplies are building up reserves.

At the start of the war on February 28, about three per cent of the company's capacity was exposed to the Gulf region, mostly with British Airways flights. The company has since boosted capacity at destinations including Bangkok, Singapore and the Maldives. It has also added additional flights to destinations with higher demand such as India and Nairobi, Kenya.

Shares in the parent company fell by four per cent after it said it expects fuel costs to reach £8 billion this year, affecting full-year profit and free cash flow. Air France-KLM cut its 2026 outlook, saying higher fuel prices would expand its fuel bill by more than a third.

Emirates stated on Thursday it was still the world's most profitable airline despite the disruption. The European Union Aviation Safety Agency has cleared the possible use of U.S. Jet A fuel in Europe to address potential shortages. Jet A is not currently used in Europe, which operates on Jet A-1.

The agency said a potential introduction of Jet A would not generate safety concerns if properly managed. The International Energy Agency warned on April 16 that Europe had six weeks of jet fuel left before shortages begin. Transport Secretary Heidi Alexander has insisted summer holiday plans will not face major disruption because jet fuel had been imported from the U.S. An EU commission spokesman said there was no concrete evidence of jet fuel shortages at the moment.