Multiple airlines to increase ticket prices and fuel surcharges

International oil prices surged past $110 per barrel on Monday, then plummeted over 11% on Tuesday, marking the largest single-day drop since 2022.

In response to unprecedented volatility in the global fuel market, airlines are beginning to raise fuel surcharges, and some have announced fare increases.

As Middle Eastern routes recover slowly, direct flights between China and Europe are in high demand, with ticket prices soaring.

International routes fuel surcharges are the first to increase

Jet fuel procurement costs are the largest component of airline expenses and a key factor in ticket pricing. The fuel surcharge paid by passengers is also linked to jet fuel prices through a mechanism.

To cope with rising fuel costs, airlines generally increase fuel surcharges. For domestic airlines, international route fuel surcharges are adjusted irregularly, with domestic routes adjusted monthly.

Hong Kong Airlines was the first to announce an increase in fuel surcharges, effective March 12: the surcharge from Hong Kong to mainland China will rise from HKD 185 to HKD 190; short-haul flights from Hong Kong to Asia will increase from HKD 162 to HKD 212; long-haul flights to Europe, America, Africa, and the Middle East will go from HKD 589 to HKD 739.

Air India announced a three-phase increase in fuel surcharges for both domestic and international flights covering all routes; Japan Airlines also indicated that due to ongoing cost increases impacting profits, they are considering imposing fuel surcharges on domestic flights.

Domestic airlines adjust their domestic route fuel surcharges monthly, based on the overall procurement cost of domestic jet fuel. When the cost is below 5000 yuan/ton, surcharges are suspended; when above 5000 yuan/ton, surcharges are applied, with 20% of the excess cost absorbed by the airline and 80% borne by passengers.

The last adjustment to domestic route fuel surcharges was on January 5 this year, with charges of 10 yuan for routes under 800 km and 20 yuan for routes over 800 km, down 10 and 20 yuan respectively from the previous month. The next adjustment is scheduled for April 5.

Prices for direct flights between China and Europe continue to soar

Alongside the increase in fuel surcharges, many foreign airlines are warning of fare hikes.

Air New Zealand stated that due to escalating tensions in the Middle East, the global aviation fuel market has experienced unprecedented volatility. The airline has raised economy class fares on domestic routes by NZD 10, short-haul routes by NZD 20, and long-haul routes by NZD 90. If the conflict persists and costs remain high, further price adjustments may be implemented.

United Airlines CEO Scott Kirby recently warned that rising oil prices related to the Middle East conflict could quickly push up ticket prices. If this trend continues, rising fuel costs could impact airline financial performance in the second quarter.

Currently, the domestic civil aviation market is in the traditional off-season after the Spring Festival, making fare increases difficult. However, international routes originating in China, especially direct flights between China and Europe, have seen ticket prices soar due to setbacks in Middle Eastern routes.

Travel agencies report that direct China-Europe flights have maintained high prices over the past week, with some economy class tickets already sold out. For example, the Beijing-Paris route: on March 12, Air France’s direct economy ticket was as low as 26,243 yuan; Air China’s direct tickets are sold out; on March 13, only business class tickets remain for Air China’s direct flight to Paris.

The rush for China-Europe direct flights is related to the pause in Middle Eastern routes. Previously, many passengers transferring through Emirates, Qatar Airways, and other Middle Eastern carriers now prefer safer and more efficient direct flights.

According to latest data from VariFlight, the Middle Eastern flight network remains “semi-recovered.” Istanbul has taken over some transfer functions, while Doha’s hub connectivity has sharply declined. Among Gulf hubs, Dubai Airport’s recovery rate is about 32.5%, Abu Dhabi Airport about 17.8%, and Doha Airport only around 1.6%.