UAE, GCC airfares to jump 30% as airlines hike fuel surcharges ahead of Eid Al Fitr
[Editor's Note: Follow Khaleej Times live blog amid US-Israel-Iran war for the latest regional developments.]Travellers in the UAE and other Gulf Cooperation Council (GCC) countries are facing airfares 30 per cent higher due to increased fuel surcharges following a rise in oil prices after the outbreak of the regional military conflict.Oil prices stayed above $100 per barrel last week due to the US-Israel-Iran conflict and the closure of the Strait of Hormuz by Tehran.This also resulted in a big global increase in jet fuel prices, further denting the bottom line of regional and global airlines.Stay up to date with the latest news. Follow KT on WhatsApp channels.Jet fuel accounts for approximately one-third of an airline's total operating costs in normal conditions.Many regional and Asian airlines have introduced or increased fuel surcharges in the past week, pushing up airfares ahead of the Eid Al Fitr holidays, which will be marked later this week in the UAE and the Gulf region.Airports and airlines across the UAE and GCC have resumed limited operations to major destinations.Saj Ahmad, chief analyst at London-based StrategicAero Research, said the GCC airline pricing, particularly from key markets like the UK, has already seen higher fares since the conflict broke out.“While there is talk of the war ending, this is an open question as to when, so while that uncertainty remains, airlines will continue to hike fares overall to reflect the higher costs of oil — if only to partially offset lost revenue from greatly diminished flight operations,” added Ahmad.Many Gulf and Asian carriers have announced, introduced, or increased surcharges to offset the impact of high oil prices.30% increase in airfaresSaj Ahmad noted that premium routes such as those from Dubai to London, New York, Mumbai and Riyadh will command the biggest price rises. “It’s very possible that airfares on such routes could climb between 10 and 20 per cent for economy class fares,” he added.James Noel-Beswick, head of commodities at Sparta, said with the Singapore kerosene benchmark having roughly doubled from around $91 to approximately $190 per barrel on Thursday, the arithmetic points clearly towards a minimum airfare increase in the region of 30 per cent and potentially considerably more on routes where supply constraints are acute or competition is reduced by groundings and cancellations.“Travellers on routes from the UAE and GCC to London, New York, Tokyo, Mumbai and Riyadh should all be planning on the basis of materially higher fares than they have been accustomed to,” he said.The March Singapore kerosene crack — the premium that jet fuel commands over crude oil and the most reliable benchmark for the divergence between the two — has risen from approximately $22 per barrel before the Israel-Iran war to over $96 per barrel on Thursday.“That is not a market fluctuation; it is a structural dislocation. To put it another way, the kerosene price itself has moved from around $91 per barrel to approximately $190 per barrel (as of Thursday). Crude oil has risen sharply, but jet fuel has risen by a multiple of that. The two markets are no longer moving in the same direction at the same speed,” he added. Airfares rise as Indian, Pakistani airlines introduce and hike fuel surchargesAir India increases fuel surcharge, flight fares likely to rise amid Israel-Iran warRecord airfares from India to US, Europe amid escalating Middle East conflict
[Editor's Note: Follow Khaleej Times live blog amid US-Israel-Iran war for the latest regional developments.]
Travellers in the UAE and other Gulf Cooperation Council (GCC) countries are facing airfares 30 per cent higher due to increased fuel surcharges following a rise in oil prices after the outbreak of the regional military conflict.
Oil prices stayed above $100 per barrel last week due to the US-Israel-Iran conflict and the closure of the Strait of Hormuz by Tehran.
This also resulted in a big global increase in jet fuel prices, further denting the bottom line of regional and global airlines.
Stay up to date with the latest news. Follow KT on WhatsApp channels.
Jet fuel accounts for approximately one-third of an airline's total operating costs in normal conditions.
Many regional and Asian airlines have introduced or increased fuel surcharges in the past week, pushing up airfares ahead of the Eid Al Fitr holidays, which will be marked later this week in the UAE and the Gulf region.
Airports and airlines across the UAE and GCC have resumed limited operations to major destinations.
Saj Ahmad, chief analyst at London-based StrategicAero Research, said the GCC airline pricing, particularly from key markets like the UK, has already seen higher fares since the conflict broke out.
“While there is talk of the war ending, this is an open question as to when, so while that uncertainty remains, airlines will continue to hike fares overall to reflect the higher costs of oil — if only to partially offset lost revenue from greatly diminished flight operations,” added Ahmad.
Many Gulf and Asian carriers have announced, introduced, or increased surcharges to offset the impact of high oil prices.
30% increase in airfares
Saj Ahmad noted that premium routes such as those from Dubai to London, New York, Mumbai and Riyadh will command the biggest price rises. “It’s very possible that airfares on such routes could climb between 10 and 20 per cent for economy class fares,” he added.
James Noel-Beswick, head of commodities at Sparta, said with the Singapore kerosene benchmark having roughly doubled from around $91 to approximately $190 per barrel on Thursday, the arithmetic points clearly towards a minimum airfare increase in the region of 30 per cent and potentially considerably more on routes where supply constraints are acute or competition is reduced by groundings and cancellations.
“Travellers on routes from the UAE and GCC to London, New York, Tokyo, Mumbai and Riyadh should all be planning on the basis of materially higher fares than they have been accustomed to,” he said.
The March Singapore kerosene crack — the premium that jet fuel commands over crude oil and the most reliable benchmark for the divergence between the two — has risen from approximately $22 per barrel before the Israel-Iran war to over $96 per barrel on Thursday.
“That is not a market fluctuation; it is a structural dislocation. To put it another way, the kerosene price itself has moved from around $91 per barrel to approximately $190 per barrel (as of Thursday). Crude oil has risen sharply, but jet fuel has risen by a multiple of that. The two markets are no longer moving in the same direction at the same speed,” he added.
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