Airlines could be forced to cut flights if jet fuel prices continue to surge and supply disruptions persist, an aviation expert has warned.
Speaking to Travel Weekly, aviation writer and analyst Robyn Ironside said the current volatility in global oil markets could push carriers to reduce services if the situation does not stabilise.
“We might see more airlines cutting flights and paring back their services,” Ironside said.
The warning comes as airlines begin responding to the latest spike in fuel costs, which has been triggered by escalating tensions in the Middle East and concerns around global oil supply.
Fuel is one of the aviation sector’s largest expenses, typically accounting for more than 30 per cent of airline operating costs and sometimes exceeding labour as the industry’s biggest single cost.
In her 12 years of covering aviation, she said she hadn’t seen prices change this quickly.
“I don’t recall worrying about fuel shortages and prices going up around 150 per cent in a matter of days,” Ironside said. “That’s certainly been pretty dramatic.”
Any prolonged disruption to shipping routes such as the Strait of Hormuz, a key passage for global oil supplies, could further tighten the market and keep prices elevated.
“If that doesn’t reopen and the oil doesn’t start flowing again, airlines will have to look at ways to manage those costs,” she said.
“That’s when we may start seeing capacity reductions.”
Air New Zealand already cutting flights
Some airlines have already begun adjusting their schedules as fuel costs climb.
Air New Zealand confirmed it will cancel roughly 1,100 flights between now and early May as it attempts to manage rising costs and operational pressures.
The airline has also suspended its earnings guidance amid the uncertainty around fuel prices.
Ironside said the Kiwi carrier had already faced a challenging period due to engine issues that have grounded parts of its fleet.
“They’ve had a really rough few years with their engine issues keeping so much of their fleet grounded,” she said. “So, this is another pressure point for them.”
However, she noted the airline’s majority government ownership means it is unlikely to fail outright.
“You’d like to think the New Zealand Government wouldn’t let them fail because they are the national carrier and very important in terms of connecting New Zealand to the rest of the world.”
Smaller airlines most exposed
While major state-backed carriers are expected to weather the current volatility, smaller airlines operating on thin margins could face greater challenges if fuel prices remain elevated.
Low-cost and regional carriers often have less financial buffer to absorb sudden cost increases.
“Those sorts of smaller airlines that have very narrow margins are going to be doing it the toughest,” Ironside said.
Even in Australia, questions remain about how some operators will respond if fuel costs remain high for an extended period.
Regional airline Rex, for example, has recently attracted scrutiny after reports indicated it was using only about half of its allocated slots at Sydney Airport.
While Ironside stressed this does not necessarily signal a broader problem, it highlights the uncertainty facing smaller carriers.
“We really haven’t heard a lot from their new owners, so we don’t know exactly what their position is,” she said.
Middle Eastern carriers protected
Despite the current geopolitical tensions, airlines based in the Middle East are unlikely to face existential threats due to the financial backing they receive from their governments.
Major carriers such as Emirates, Etihad Airways and Qatar Airways all benefit from strong state support.
“We won’t see the Middle Eastern carriers go under,” Ironside said. “Their governments are very wealthy and they have strong support.”
Airfares likely to keep rising
While flight cuts remain a possibility, travellers are already seeing the more immediate impact of rising fuel costs through higher airfares.
Airlines around the world are facing multiple upward cost pressures, including inflation, environmental charges and fuel volatility.
Airports are also introducing additional fees, such as Singapore’s upcoming green charge on flights passing through the hub from April.
“All we ever hear is that airline prices are going up,” Ironside said. “It does look not great for airfares and the travelling public.”
Carter Capner Law warns over cheap airfares by Middle East carriers
Demand remains strong
Despite the challenges, the aviation sector remains fundamentally healthy in terms of passenger demand. Air travel demand continues to grow globally as travellers prioritise international trips and experiences.
“Passenger demand just seems to keep growing from month to month and year to year,” Ironside said.
But the current fuel shock is a reminder of how exposed aviation remains to global energy markets.
“It’s still got a while to run in terms of what’s going to happen with the fuel situation.”
