An aviation consultant says the spike in jet fuel driven by the US-Israel conflict with Iran is likely to be a blip but will bring airline fuel surcharges back.
Eagle Aviation managing director Simon Russell says current fuel prices are likely to fall in the coming weeks or months. Prices are well below those seen in 2023 and the even sharper spike in 2008. But Brent crude surged by around 6% on Wed morning to USD85 a barrel and has increased by about 30% this year.
“The current reporting is ‘doom and gloom,’ however airlines have mechanisms such as fuel surcharges—a transparent way of showing fuel increases on airfares and haven’t been used much in recent years,’’ Auckland-based Russell says.
. . . QF Stopover
Alton Aviation Consultancy associate director Clark Johns says the biggest impact on airlines’ fuel and operational expenses will be due to longer stage lengths and block times for routes which previously overflew the now-closed airspace, and this will drive increased fuel and crew costs for airlines. Depending on route, this may drive need payload restrictions to enable aircraft to carry more fuel or make technical stops for refuelling.
This is already happening with Qantas’ QF9 Perth to London which is now operating via Singapore for a fuel stop due to adjustments required on flight paths. It is estimated three hours will be added to the 17-hour flight time.
The length of conflict and airspace closure will impact outcomes longer term, especially if some airlines may look to temporarily suspend impacted services and look to rede ploy aircraft elsewhere, particularly if they face aircraft availability constraints. Fuel is typically the second largest single cost for airlines.
. . . Fare Hike
In addition to fuel cost, airfares are expected to rise due to increased demand to reroute away from the Middle East in the short-term— but there is limited air capacity on those routes. Given New Zealand’s geographic location and the already high demand for UK/Europe flights, agents say they are bracing for ‘sky high’ airfares across the cabins, particularly over Asia.
