Airfare prices are rising, routes are being cut, and low-cost airlines are beginning to struggle. The jet fuel crisis triggered by the US-Iran conflict is not merely a geopolitical issue, but a tangible disruption that is directly affecting passengers’ wallets, including those in Southeast Asia.
Within just two months since the conflict erupted in late February, the global aviation industry’s economic model has been severely shaken: major Gulf hubs were nearly paralyzed, fuel prices surged to record highs, and thousands of flights were canceled.
What makes this crisis different from previous oil price shocks is its scale and speed. The near-total closure of the Strait of Hormuz disrupted around 20 percent of the world’s oil supply at once, forcing refineries across Asia and Europe to rapidly cut jet fuel production.
Fuel Prices Surge, Flights Reduced
The average price of jet fuel in Singapore, the benchmark for regional aviation fuel costs, reached US$214.71 per barrel between March 16 and April 15, marking a 150 percent increase compared to two months earlier.
As oil flows from the Persian Gulf were disrupted, refineries across multiple regions were forced to reduce jet fuel output. Asia became the hardest-hit region because most of the crude oil shipped through the Strait of Hormuz is destined for Asian markets.
South Korean airlines responded by cutting 900 round-trip flights. Jeju Air, the country’s largest low-cost carrier, reduced 187 international flights, equivalent to four percent of its total operations, including routes to Bangkok, Singapore, Da Nang, and Phu Quoc.
Jin Air cut 176 flights to various destinations, including Guam. Meanwhile, Asiana Airlines reduced 27 round-trip flights across six routes through July, including services to Phnom Penh and Istanbul.
Low-Cost Airlines Are the Most Vulnerable
The business model of low-cost airlines depends heavily on cost efficiency. When fuel prices surge sharply, that margin narrows dramatically. According to the International Air Transport Association (IATA), jet fuel can account for up to 30 percent of an airline’s total operating costs.
T'way Air and Jeju Air introduced unpaid leave programs for employees, while Jin Air delayed the payment of safety incentives.
T'way Air was already facing a financial crisis after recording losses for two consecutive years, with its debt ratio exceeding 3,400 percent by the end of 2025. Air Premia has also been struggling with insufficient capital, and if the issue is not resolved soon, its operating license could be at risk of revocation.
Meanwhile, several major Asian airlines have started shifting to more fuel-efficient aircraft. Etihad Airways replaced the Airbus A350 with the Boeing 787 on its Abu Dhabi–Hong Kong route.
Emirates has been operating at roughly two-thirds of its pre-conflict capacity. Meanwhile, Japan’s All Nippon Airways (ANA) estimates it will incur an additional £650 million in fuel costs by March next year.
Ticket Prices Rise, Passenger Choices Become More Limited
Passengers are already feeling the impact directly. In the United States, the average price of an international round-trip flight rose 16 percent year-on-year to US$1,101 as of April, according to travel comparison platform Kayak. Domestic ticket prices increased 24 percent to US$365.
Cathay Pacific has also begun adjusting fuel surcharges, which for long-haul round-trip flights could reach around US$350 starting in mid-May.
Globally, around 13,000 flights were canceled in May alone, representing 1.5 percent of global capacity, according to senior Beroe analyst Pawan Jain, as cited by Travel Weekly.
Viet Nam has started rationing jet fuel supplies. Philippines, Sri Lanka, and several other Asian countries have also experienced fuel rationing after China and South Korea restricted fuel exports to protect their domestic supplies.
How Long Will This Last?
Even if the Strait of Hormuz fully reopens, normalization will not happen overnight. United Airlines estimates that it may recover up to 100 percent of its additional fuel costs by the end of the year through higher ticket prices.
Société Générale noted that jet fuel inventories at major European hubs had already fallen to their lowest levels in five years by the end of April. In Asia, similar pressure is likely to persist as long as the region remains heavily dependent on Middle Eastern oil supplies.
For passengers planning to fly in the near future, one thing is certain: the era of cheap airfares is unlikely to return anytime soon.
